CIMIC Group Limited Annual Report 2023 | Directors’ Report
Directors’ Report
The Directors present their report for the 2023 Financial Year (FY23) in respect of the Company and certain entities it controlled
(‘the Group’ or “CIMIC’). This Directors’ report has been prepared in accordance with the requirements of the Corporations Act and
is dated 13 February 2024.
DIRECTORS
The directors of the Company at any time during or since the end of the financial year were:
DIRECTORS
Juan Santamaria
Executive Chairman since November 2020, CEO and
Managing Director from February 2020 to May 2022.
Russell Chenu
Independent Non-executive Director since June 2014.
José-Luis del Valle Pérez
Pedro López Jiménez
Non-executive Director since March 2014.
Non-executive Director since March 2014.
David P Robinson
Peter W Sassenfeld
Non-executive Director since December 1990.
Non-executive Director since November 2011.
Kathryn Spargo
Robert L Seidler AM
Independent Non-executive Director since September 2017.
Non-executive Director appointed 23 October 2023.
COMPANY SECRETARY
Kate Glennon was appointed secretary of the Company on 22 June 2022.
Priti Pasupuleti was appointed secretary of the Company on 20 July 2023.
FORMER PARTNERS OF THE AUDIT FIRM
No person who was an officer of the Company during the 2023 financial year was a director or partner of the Company’s external
auditor at a time the Company’s external auditor conducted the audit.
PRINCIPAL ACTIVITIES
The Group is an engineering-led construction, mining, services and public private partnerships leader working across the lifecycle of
assets, infrastructure and resources projects.
REVIEW OF OPERATIONS
The Company reported a profit for the year after tax of $438.7 million (2022: $426.2 million). Further information on the Group’s
operations is included in CIMIC’s 2023 Annual Review available at https://www.cimic.com.au/our-group/financial-
information/annual-review-and-sustainability-report.
CHANGES IN STATE OF AFFAIRS
There was no significant change in the state of affairs of the Company during the financial year.
SUBSEQUENT EVENTS
Refer to Note 39: Events subsequent to reporting date.
FUTURE DEVELOPMENTS
The Group will continue to concentrate on the significant opportunities in the engineering-led construction, mining, services and
public private partnerships sectors in Australia, and international markets including Asia and North and South America.
DIVIDENDS
A final dividend of 19.0 cents per share in respect of the year ended 31 December 2022 was announced and paid during the year
ended 31 December 2023. The interim dividend of 39.0 cents per share was announced and paid during the year ended 31
December 2023.
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CIMIC Group Limited Annual Report 2023 | Directors’ Report
Directors’ Report continued
ENVIRONMENTAL REGULATION
Under section 299(1)(f) of the Corporations Act, an entity is required to provide a summary of its environmental performance in
terms of compliance with Australian environmental regulations.
Within Australia, the Company is required to report under the NGER Scheme. In addition, the Operating Companies are subject to
project specific regulations across the various jurisdictions in which they operate. Failure to comply with these corporate and
project specific requirements may result in penalties such as remediation of damage, court injunctions, and criminal and civil
penalties.
To assist the Board in discharging its responsibilities the Company has adopted a governance framework which provides for:
▪
the delegation of accountability for achieving compliance with regulatory requirements (and other requirements) to the most
appropriate person or group within the organisation; and
an assurance and reporting process for the evaluation and oversight of compliance with these requirements to the Board.
▪
In FY23:
▪
▪
the Company submitted its NGER Scheme report with EY, our NGER Scheme external auditor, providing limited assurance; and
across the 92.7 million hours worked on projects there were no material breaches of legislation or conditions of approval (i.e.,
those resulting in prosecution, significant financial penalties or contractual action against the Company, executive officers or
individuals). However, there were six breaches (FY22: nine breaches) which involved written warnings from environmental
regulators and one fine totalling $3,400 (FY22: one fine totalling $2,192) the detail of which is set out in the Sustainability
Report available at: www.cimic.com.au/sustainability
For further information regarding the Company’s environmental governance, management approach and performance (which
extends beyond compliance), please refer to the Sustainability Report.
REMUNERATION OF KEY MANAGEMENT PERSONNEL
Information about the remuneration of key management personnel is included in Note 36(a): Key management personnel (KMP)
and Directors.
INDEMNITY FOR COMPANY OFFICERS AND AUDITORS
CONSTITUTION
The Constitution includes indemnities in favour of people who are, or have been, an ‘Officer’ of the Company. ‘Officer’ is defined in
the Constitution as any director, alternate director or secretary of the Company or its related bodies corporate.
The Constitution states that, to the full extent permitted by law, the Company indemnifies each Officer, against all losses, liabilities,
costs, charges and expenses incurred while acting in that capacity.
DIRECTORS’ DEED OF INDEMNITY
The Company has entered into deeds of indemnity, insurance and access with its current and former Directors. Under each
director’s deed, the Company indemnifies the Director to the extent permitted by law against any liability (including liability for
legal defence costs) incurred by the Director as an Officer or former Officer of the Company or any Operating Company, or while
acting at the request of the Company or any Operating Company as an Officer of a non-controlled entity.
DEEDS OF INDEMNITY FOR CERTAIN OFFICERS AND EMPLOYEES
The Company has entered into deeds of indemnity with particular Officers, employees or former Officers and employees of the
Company and Operating Companies. These deeds of indemnity give indemnities in favour of those Officers, employees or former
Officers and employees in respect of liabilities incurred by them while acting in their applicable capacities in the Company or any
Operating Company, or while acting at the request of the Company or any Operating Company as an Officer or employee of a non-
controlled entity.
The Officers and employees who have the benefit of a deed of indemnity are, or were at the time:
▪
a Director, Company Secretary, General Counsel or an executive (in a role that has been approved by the CEO, CFO or
Company Secretary) of the Company, an Operating Company or a subsidiary of an Operating Company; or
a Director, Company Secretary or an executive (in a role that has been approved by the CEO, CFO or Company Secretary) of a
non-controlled entity at the request of the Company or an Operating Company.
▪
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CIMC Group Limited Annual Report 2023 1 Directors’ Report
Directors’ Report continued
INDEMNITY FOR COMPANY OFFICERS AND AUDITORS CONTINUED
INSURANCE FOR GROUP OFFICERS
During and since the end of FY23, the Company has paid or agreed to pay premiums in respect of contracts insuring individuals who
are or have been an Officer against certain liabilities (including legal costs) incurred in that capacity.
Under the directors’ deeds and the deeds of indemnity described aboye, the Company has undertaken to the relevant Officer,
employee or former Officer or employee that it will insure the Officer or employee against certain liabilities incurred in their
applicable capacity in the Company or any Subsidiary or as an Officer or employee of a non-controlled entity where the position is,
or was, held at the request of the Company or any Subsidiary.
The insurance contracts entered into by the Company prohibit disclosure of the specific nature of the liabilities covered by the
insurance contracts and the amount of the premiums.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is included on page 4.
ROUNDING OF AMOUNTS
The Company ¡5 a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191, the Directors have chosen to round amounts in this Directors’ Report and the accompanying financial report to the
nearest hundred thousand dollars, unless otherwise indicated.
This Directors’ report is signed in accordance with a resolution of the directors made pursuant to s.298(2) of the Corporations Act
2001.
Qn behalfofthe Directors
Sydney, 13 February 2024.
3
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Quay Quarter Tower
50 Bridge Street
Sydney NSW 2000
Australia
Tel: +61 (0) 2 9322 7000
www.deloitte.com.au
The Directors
CIMIC Group Limited
25/177 Pacific Highway
NORTH SYDNEY NSW 2060
13 February 2024
Dear Directors
Auditor’s Independence Declaration to CIMIC Group Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration
of independence to the Directors of CIMIC Group Limited.
As lead audit partner for the audit of the financial report of CIMIC Group Limited for the year ended 31 December
2023, I declare that to the best of my knowledge and belief, there have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Jason Thorne
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
4
CIMIC Group Limited Annual Report 2023 | Financial Report
Financial Report
TABLE OF CONTENTS
Consolidated Statement of Profit or Loss
Consolidated Statement of Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
1.
Summary of accounting policies
2. Revenue
3.
Expenses
4. Net finance income / (costs)
5. Auditors’ remuneration
6.
Income tax expense
7. Cash and cash equivalents
8.
Trade and other receivables
9. Current tax assets
10. Inventories
11. Investments accounted for using the equity method
12. Other investments
13. Deferred taxes
14. Property, plant and equipment
15. Intangibles
16. Trade and other payables
17. Current tax liabilities
18. Provisions
19. Interest bearing liabilities
20. Lease liabilities
21. Share capital
22. Reserves
23. Retained earnings
24. Dividends
25. Associates
26. Joint venture entities
27. Joint operations
28. Notes to the Statement of Cash Flows
29. Acquisitions and disposals
30. Held for sale
31. Commitments
32. Contingent liabilities
33. Capital risk management
34. Financial instruments
35. Employee benefits
36. Related party disclosures
37. CIMIC Group Limited and controlled entities
38. New accounting standards
39. Events subsequent to reporting date
Directors’ Declaration
Independent Auditor’s Report to the Members of CIMIC Group Limited
Page
6
7
8
9
10
11
11
25
25
26
26
27
28
28
29
30
30
31
32
33
34
36
36
36
37
37
38
39
40
41
41
43
47
49
51
51
52
53
54
55
75
76
79
89
89
90
91
5
CIMIC Group Limited Annual Report 2023 | Financial Report
Consolidated Statement of Profit or Loss
for the 12 months to 31 December 2023
Revenue
Expenses
Finance income
Finance costs
Share of profits of associates and joint ventures
Other gains
Profit before tax
Income tax expense
Profit for the year
Note
2
3
4
4
25, 26
12
6
12 months to
December 2023
$m
12 months to
December 2022
$m
13,279.3
(12,753.0)
11,086.9
(11,088.3)
78.2
(263.5)
153.3
-
494.3
(55.6)
438.7
35.2
(183.7)
169.0
531.7
550.8
(124.6)
426.2
(Profit) / loss for the year attributable to non-controlling interests
(3.5)
(0.6)
Profit for the year attributable to shareholders of the parent entity
435.2
425.6
Dividends per share - Final
Dividends per share - Interim
24
24
-
39.0¢
19.0¢
39.0¢
The consolidated statement of profit or loss is to be read in conjunction with the notes to the consolidated financial report.
6
CIMIC Group Limited Annual Report 2023 | Financial Report
Consolidated Statement of Other Comprehensive Income
for the 12 months to 31 December 2023
12 months to
December 2023
$m
12 months to
December 2022
$m
Note
Profit for the year attributable to shareholders of the parent entity
435.2
425.6
Other comprehensive income attributable to shareholders of the parent entity:
Items that may be reclassified to profit or loss:
-
Foreign exchange translation differences
- Effective portion of changes in fair value of cash flow hedges (net of tax)
Items that will not be reclassified to profit or loss:
-
Fair value gain / (loss) on investments designated as fair value through other
comprehensive income (net of tax)
22
22
22
3.4
(36.2)
50.4
131.9
7.4
(14.0)
Other comprehensive (loss) / income for the year
(25.4)
168.3
Total comprehensive income for the year attributable to shareholders
of the parent entity
409.8
593.9
Total comprehensive income for the year attributable to shareholders
of the parent entity:
Total comprehensive income for the year
Total comprehensive income for the year attributable to non-controlling interests
Total comprehensive income for the year attributable to shareholders
of the parent entity
413.3
(3.5)
594.5
(0.6)
409.8
593.9
The consolidated statement of other comprehensive income is to be read in conjunction with the notes to the consolidated financial
report.
7
CIMIC Group Limited Annual Report 2023 | Financial Report
Consolidated Statement of Financial Position
as at 31 December 2023
Assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Inventories: consumables and development properties
Asset held for sale
Total current assets
Trade and other receivables
Inventories: development properties
Investments accounted for using the equity method
Other investments
Deferred tax assets
Property, plant and equipment
Intangibles
Total non-current assets
Total assets
Liabilities
Trade and other payables
Current tax liabilities
Provisions
Financial liability
Interest bearing liabilities
Lease liabilities
Total current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non-controlling interests
Total equity
31 December
2023
$m
31 December
2022
$m
Note
7
8
9
10
30
8
10
11
12
13
14
15
16
17
18
28
19
20
16
18
19
20
21
22
23
2,498.9
3,135.8
156.6
259.0
-
6,050.3
339.1
67.3
1,893.4
320.1
297.1
535.4
971.3
4,423.7
10,474.0
5,007.4
24.4
294.1
-
-
82.6
5,408.5
179.0
19.7
3,045.0
154.8
3,398.5
8,807.0
2,569.0
2,806.5
154.2
269.4
44.1
5,843.2
414.1
68.4
1,817.3
915.8
234.1
566.7
941.4
4,957.8
10,801.0
5,203.7
14.1
268.9
33.7
110.1
75.3
5,705.8
216.1
18.2
3,235.2
189.3
3,658.8
9,364.6
1,667.0
1,436.4
1,458.7
(469.5)
683.2
1,672.4
(5.4)
1,667.0
1,458.7
(448.9)
433.1
1,442.9
(6.5)
1,436.4
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial report.
8
CIMIC Group Limited Annual Report 2023 | Financial Report
Consolidated Statement of Changes in Equity
for the 12 months to 31 December 2023
Note
Share
capital
Reserves
Retained
earnings
Attributable
to equity
holders
$m
1,082.5
Non-
controlling
interests
$m
(3.3)
Total
equity
$m
1,079.2
425.6
168.3
0.6
-
426.2
168.3
$m
241.0
425.6
-
Total equity at 1 January 2022
Profit for the year
Other comprehensive income
Transactions with shareholders in their
capacity as shareholders:
- Dividends
Total transactions with shareholders
24
$m
1,458.7
$m
(617.2)
-
168.3
-
-
-
-
-
-
(233.5)
(233.5)
(233.5)
(233.5)
(3.8)
(3.8)
(237.3)
(237.3)
Total equity at 31 December 2022
1,458.7
(448.9)
433.1
1,442.9
(6.5)
1,436.4
Total equity at 1 January 2023
Profit for the year
Other comprehensive loss
Transactions with shareholders in their
capacity as shareholders:
- Dividends
Total transactions with shareholders
Other equity movements:
-
Transfer of reserve on disposal of
investment
Other
-
Total other equity movements
-
-
-
-
-
-
-
24
22
22
Share
capital
Reserves
Retained
earnings
$m
1,458.7
$m
(448.9)
-
(25.4)
Attributable
to equity
holders
$m
1,442.9
Non-
controlling
interests
$m
(6.5)
Total
equity
$m
1,436.4
435.2
(25.4)
3.5
-
438.7
(25.4)
$m
433.1
435.2
-
-
-
(180.5)
(180.5)
(180.5)
(180.5)
(2.4)
(2.4)
(182.9)
(182.9)
4.6
0.2
4.8
(4.6)
-
(4.6)
-
0.2
0.2
-
-
-
-
0.2
0.2
Total equity at 31 December 2023
1,458.7
(469.5)
683.2
1,672.4
(5.4)
1,667.0
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated financial report.
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CIMIC Group Limited Annual Report 2023 | Financial Report
Consolidated Statement of Cash Flows
for the 12 months to 31 December 2023
Cash flows from operating activities
Cash receipts in the course of operations (including GST)
Cash payments in the course of operations (including GST)
Operating cash flow
Interest received
Finance costs paid
Income taxes paid
Net cash inflow / (outflow) from operating activities
28 (a)
Cash flows from investing activities
Payments for intangibles
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from sale of investments
Cash acquired from acquisition of investments
Cash disposed from sale of investments
Dividends from investments
Loans to associates and joint ventures
Payments for investments
Net cash inflow / (outflow) from investing activities
Cash flows from financing activities
Repayment of financial liability
Proceeds from borrowings
Repayment of borrowings
Repayment of leases
Dividends paid to shareholders of the Company
Net cash (outflow) / inflow from financing activities
Net (decrease) / increase in cash held
Cash and cash equivalents at the beginning of the period
Effects of exchange rate fluctuations on cash held
Cash and cash equivalents at reporting date
28 (b)
28 (b)
28 (b)
28 (b)
24
7
12 months to
December 2023
$m
12 months to
December 2022
$m
Note
13,908.7
(13,634.8)
273.9
11,888.9
(11,225.3)
663.6
80.3
(214.2)
(17.9)
122.1
(9.9)
(253.1)
18.0
682.3
1.3
(1.3)
33.6
(8.0)
(86.4)
376.5
(34.0)
2,617.1
(2,872.6)
(98.0)
(180.5)
(568.0)
(69.4)
2,569.0
(0.7)
2,498.9
32.0
(148.3)
(73.1)
474.2
(16.0)
(178.1)
17.4
60.9
0.7
(14.9)
20.9
-
(244.3)
(353.4)
(38.9)
2,678.8
(1,815.7)
(91.8)
(233.5)
498.9
619.7
1,939.7
9.6
2,569.0
10
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated financial report.
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
1. SUMMARY OF ACCOUNTING POLICIES
Statement of compliance
CIMIC Group Limited (the Company) is a company domiciled in Australia. The consolidated financial statements of the Company
comprise the Company and its controlled entities (the Consolidated Entity or Group) and the Consolidated Entity’s interest in
associates and joint arrangements.
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting
Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and in accordance with the Corporations Act
2001. The financial report of the Consolidated Entity also complies with International Financial Reporting Standards (IFRS) as
adopted by the International Accounting Standards Board (IASB).
The standards, amendments to standards and interpretations available for early adoption at reporting date that have not been
applied in preparing this financial report are detailed in Note 38: New accounting standards.
The consolidated financial report was authorised for issue by the Directors on 13 February 2024.
Basis of preparation
Presentation
The financial report is presented in Australian dollars, which is the Company’s functional currency. All amounts disclosed in the
financial report relate to the Group unless otherwise stated. The financial report has been prepared on the historical cost basis,
except for financial instruments and investment properties that have been measured at fair value. These financial statements have
been prepared on a going concern basis, after taking into consideration all drawn and undrawn facilities.
The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial / Directors’ Reports) Instrument
2016/191 and in accordance with that ASIC Instrument, amounts in the financial report have been rounded off to the nearest
hundred thousand dollars, unless otherwise stated.
Market conditions
The industry continues to experience inflationary pressures as a whole. The Group is managing this exposure through contractual
mechanisms, leveraging its existing supply chain, upfront procurement contracts and financial hedging strategies.
In the industries in which we operate we are experiencing a skills shortage which is driving a demand for labour. This demand,
when combined with inflationary pressures, is putting upward pressure on wages. The Group continues to monitor remuneration
benchmarks and has in place long standing staff retention strategies.
Notwithstanding possible future uncertainties, the outlook across the Group’s core markets remains positive with strong levels of
work in hand. The Group continues to monitor macro‐economic and other risk factors. It considers the possible impacts that these
uncertainties may have on liquidity assessments, asset valuation and contract cost forecasts.
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CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
1. SUMMARY OF ACCOUNTING POLICIES CONTINUED
Accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and are believed to be reasonable under the
circumstances. Revisions to estimates are recognised in the period in which the estimate is revised and in any future period
affected.
CIMIC integrates environmental, social and governance (ESG) factors, and specifically the risks and opportunities of climate change,
into its business operations. ESG is integrated into the group governance, strategy, risk management, and the setting of - and
measuring against - metrics and targets. The possible impacts of ESG factors have been considered in the financial report. CIMIC is
committed to operating sustainably and detailed reporting on its ESG performance and progress is set out in the Group’s
Sustainability Report available at: www.cimic.com.au/sustainability.
Judgements made in the application of AASBs that could have a significant effect on the financial report and estimates with a risk of
adjustment in the next year are as follows:
▪ Construction and services projects:
- Determination of stage of completion;
- Estimation of total contract costs;
- Estimation of total contract revenue, including recognising revenue on contract variations and claims only to the extent it is
highly probable that a significant reversal in the amount recognised will not occur in the future;
- Estimation of project completion date; and
- Assumed levels of project execution productivity.
▪ Determination of control or joint control:
We continually reassess facts and circumstances based on currently available information to consider, under Australian Accounting
Standards, if changes are required to previous conclusions regarding control or joint control determinations.
Investment in Thiess
On 31 December 2020 CIMIC and Elliott Advisors (UK) Ltd (“Elliott”) entered into an agreement whereby funds advised by Elliott
acquired a 50% equity interest in Thiess, with CIMIC retaining the other 50% equity interest. The transaction agreements
contemplate future share transfer options including a potential initial public offering or sale to a third party, and an option (“Put
Option”) for Elliott to sell all or part of its interest in Class A preference shares or ordinary shares in Thiess to CIMIC between three
and six years from completion. The Shareholders Agreement also prescribes a minimum distribution to each shareholder of $180.0
million for the first six years, with Elliott receiving preferential payment. CIMIC provided business warranties and indemnities as
part of the transaction which are subject to customary limitations.
Judgement was required in determining that Thiess is a jointly controlled entity of the Group. CIMIC and Elliott are exposed to the
variable returns of Thiess. Elliott is exposed to equity risks and rewards while it holds the equity interest including during the period
that the Put Option is exercisable. The pricing of the Put Option does not provide Elliott the ability to take advantage of any positive
changes in the fair value of Thiess. Any changes in the fair value of the Put Option are recognised in CIMIC’s statement of profit or
loss.
As CIMIC does not have the ability to direct Thiess’ relevant activities, and given Elliott is exposed to variable returns, it is
determined that CIMIC and Elliott jointly control Thiess. In the year ended 31 December 2023, the Group continues to account for
Thiess as a joint venture.
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CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
1. SUMMARY OF ACCOUNTING POLICIES CONTINUED
Accounting estimates and judgements continued
▪ Change in tax consolidation group:
As previously reported, upon CIMIC’s entry into the HOCHTIEF Australia Holdings Limited tax group on 10 June 2022, the Income
Tax Assessment Act 1997 required the tax values of CIMIC Group’s assets to be reset in accordance with the tax cost resetting
principles. Final submission has now been made to the Australian Tax Office (ATO) in respect of the tax resetting process. The
accounting impact of the change in tax group is disclosed in Note 6: Income tax expense. The net impact results from a number of
offsetting adjustments to reset various tax cost bases predominantly related to financial investments, inventories and property,
plant and equipment.
▪ Estimation of allowance for expected credit losses:
The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised
cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For
trade receivables, contract debtors and lease receivables, the Group applies the simplified approach permitted by AASB 9: Financial
Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Refer to Note 8:
Trade and other receivables and Note 36: Related party disclosures.
▪ Leasing:
- Determination of the existence of leases;
- Estimation of residual value guarantees and buy out options of lease liabilities; and
- Estimation of lease extension options, refer to Note 20: Lease liabilities.
▪ Asset disposals:
- Other assets: determination as to whether the significant risks and rewards of ownership have transferred, refer to Note 1:
Summary of accounting policies.
▪ Estimation of the economic life of property, plant and equipment and intangibles, refer to Note 14: Property, plant and
equipment and Note 15: Intangibles.
▪ Asset impairment testing, including assumptions in value in use calculations, refer to Note 15: Intangibles.
▪ Assessment of measurement and classification of financial instruments including fair values and trade finance arrangements,
refer to Note 34: Financial instruments.
▪ Determination of the fair value of assets and liabilities arising from business combinations.
13
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
1. SUMMARY OF ACCOUNTING POLICIES CONTINUED
New and amended standards adopted by the Company
New and amended standards adopted by the Company
In the current year, the Company has applied a number of new and revised accounting standards and amendments that are
mandatorily effective for an accounting period that begins on or after 1 January 2023, as follows:
▪
▪
▪
▪
AASB 17 Insurance Contracts
AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of Accounting
Estimates
AASB 2022-8 Amendments to Australian Accounting Standards – Insurance Contracts: Consequential Amendments
AASB 2023-2 Amendments to Australian Accounting Standards – International Tax Reform – Pillar Two Model Rules
The group has adopted the amendments to AASB 112 for the first time in the current year. The IASB amends the scope of AASB 112
to clarify that the Standard applies to income taxes arising from tax law enacted or substantively enacted to implement the Pillar
Two model rules published by the Organisation for Economic Co-operation and Development (‘OECD’), including tax law that
implements qualified domestic minimum top- up taxes described in those rules. The amendments introduce a temporary exception
to the accounting requirements for deferred taxes in AASB 112, so that an entity would neither recognise nor disclose information
about deferred tax assets and liabilities related to Pillar Two income taxes.
While the standards listed above introduce new disclosure requirements, they do not materially affect the Group’s accounting
policies or any of the amounts recognised in the financial statements.
Basis of consolidation
Subsidiaries
The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
Results of controlled entities are included in the consolidated statement of profit or loss from the date control is obtained or
excluded from the date the entity is no longer controlled. Intragroup balances and transactions, and any unrealised gains or losses
arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity
owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and
non-controlling interests to reflect their relative interests in the controlled entity.
Any difference between the amount of the adjustment to non-controlling interests and the fair value of the consideration paid or
received is recognised in the equity reserve. When the Group ceases to have control, any retained interest in the entity is re-
measured to its fair value with the change in carrying amount recognised in profit or loss.
Controlled entities
Investments in controlled entities are carried in the Company’s financial statements at cost less impairment.
14
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
1. SUMMARY OF ACCOUNTING POLICIES CONTINUED
Basis of consolidation continued
Investments in associates
Associates are those entities in which the Group has significant influence, but not control or joint control, over the entity.
Significant influence is presumed to exist when the Group owns between 20% and 50% of the voting power of another entity.
Investments in associates are accounted for using the equity method and recognised initially at cost. The cost of the investments
includes transaction costs and goodwill on acquisition.
The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of equity
accounted investments, after adjustments for impairment and after aligning the accounting policies with those of the Group, from
the date that significant influence commences until the date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an equity accounted investment, the carrying value of the investment,
including any long-term interests that form part thereof, is reduced to zero, and the recognition of further loss is discontinued
except to the extent that the Company has an obligation or has made payments on behalf of the investee.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in these
entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Joint arrangements
Under AASB 11: Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures
depending on the contractual rights and obligations each investor has, rather than the legal structure of the joint arrangement. The
Company has assessed the nature of its joint arrangements and determined to have both joint operations and joint ventures.
Joint operations
The Group recognises its direct right, and its share of, jointly held assets, liabilities, revenues and expenses of joint operations.
These have been incorporated in the financial statements under the appropriate headings. Details of joint operations are set out in
Note 27: Joint operations.
Joint ventures
Interests in joint ventures are accounted for using the equity method. Under this method, the interests are initially recognised in
the consolidated statement of financial position at cost, including transaction costs and goodwill on acquisition, and adjusted
thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income
in profit or loss and other comprehensive income respectively.
Where a joint venture held by the Group has outstanding cumulative preference shares, which are held by parties other than the
Group and are classified as equity by the joint venture, the Group computes its share of profit or loss from the joint venture after
adjusting for the dividends on the cumulative preference shares, whether or not the dividends have been declared. When the
Group’s share of losses in a joint venture equals or exceeds its interests in the joint venture (which includes any long-term interests
that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognise further losses,
unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in
the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Accounting policies of the joint ventures have been adjusted where necessary, to ensure consistency with the policies
adopted by the Group.
Other investments
Other investments are accounted for as fair value through profit and loss or other comprehensive income financial assets on a case
by case basis.
15
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
1. SUMMARY OF ACCOUNTING POLICIES CONTINUED
a) Revenue recognition
Construction revenue
The Group derives revenue from the long-term construction of major infrastructure projects, including roads, railways, tunnels,
airports, buildings, social infrastructure, water, renewable energy, energy transmission and storage, and resources facilities across
Australia and Asia. Contracts entered into may be for the construction of one or several separate inter-linked pieces of large
infrastructure. The construction of each individual piece of infrastructure is generally taken to be one performance obligation.
Where contracts are entered for the building of several projects the total transaction price is allocated across each project based
on stand-alone selling prices. The contracts with clients are under various risk appropriate commercial models, including lump sum,
cost plus, alliance and incentivised target costs. The transaction price is normally fixed at the start of the project. It is normal
practice for contracts to include bonus and penalty elements based on timely construction or other performance criteria known as
variable consideration, discussed below.
The performance obligation is fulfilled over time and as such revenue is recognised over time. As work is performed on the assets
being constructed, they are controlled by the customer and have no alternative use to the CIMIC Group, with the Group having a
right to payment for performance to date.
Generally, contracts identify various inter-linked activities required in the construction process. Revenue is recognised on the
measured output of each process based on appraisals that are agreed with the customer on a regular basis.
Revenue earned is typically invoiced monthly or in some cases on achievement of milestones or to match major capital outlay.
Invoices are paid on normal commercial terms, which may include the customer withholding a retention amount until finalisation
of the construction. Certain construction projects entered into receive payment prior to work being performed in which case
revenue is deferred on the balance sheet.
Services revenue
The Group performs maintenance, mineral processing and other services for a variety of different industries. Contracts entered
into can cover servicing of related assets which may involve various different processes. These processes and activities tend to be
highly inter-related and the Group provides a significant service of integration for these assets under contract. Where this is the
case, these are taken to be one performance obligation. The total transaction price is allocated across each service or performance
obligation and, where linked, the construction of the relevant asset. The transaction price is allocated to each performance
obligation based on contracted prices. The total transaction price may include variable consideration.
Performance obligations are fulfilled over time as the Group enhances assets which the customer controls, for which the Group
does not have an alternative use and for which the Group has right to payment for performance to date. Revenue is recognised in
the accounting period in which the services are rendered based on the amount of the expected transaction price allocated to each
performance obligation. Customers are in general invoiced on a monthly basis for an amount that is calculated on either a schedule
of rates or a cost plus basis that are aligned with the stand alone selling prices for each performance obligation. Payment is
received following invoice on normal commercial terms.
Variable consideration
It is common for contracts to include performance bonuses or penalties assessed against the timeliness or cost effectiveness of
work completed or other performance related KPIs. Where consideration in respect of a contract is variable, the expected value of
revenue is only recognised when the uncertainty associated with the variable consideration is subsequently resolved, known as
“constraint” requirements. The Group assesses the constraint requirements on a periodic basis when estimating the variable
consideration to be included in the transaction price. The estimate is based on all available information including historic
performance. Where modifications in design or contract requirements are entered into, the transaction price is updated to reflect
these. Where the price of the modification has not been confirmed, an estimate is made of the amount of revenue to recognise
whilst also considering the constraint requirement.
Contract assets and liabilities
AASB 15: Revenue from Contract with Customers uses the terms ‘contract asset’ and ‘contract liability’ to describe what is
commonly known as ‘accrued revenue’ and ‘deferred revenue’. Contract receivables represent receivables in respect of which the
Group’s right to consideration is unconditional subject only to the passage of time. Contract receivables are non-derivative financial
assets accounted for in accordance with the Group’s accounting policy for non-derivative financial assets set out in Note 1(d): Non-
derivative financial instruments. Contract assets represent the Group’s right to consideration for services provided to customers for
which the Group’s right remains conditional on something other than the passage of time. Contract liabilities arise where payment
is received prior to work being performed. Contract assets and contract liabilities are recognised and measured in accordance with
this accounting policy.
16
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
1. SUMMARY OF ACCOUNTING POLICIES CONTINUED
a) Revenue recognition continued
Contract fulfilment costs
Costs incurred prior to the commencement of a contract may arise due to mobilisation/site setup costs, feasibility studies,
environmental impact studies and preliminary design activities as these are costs incurred to fulfil a contract. Where these costs
are expected to be recovered, they are capitalised and amortised over the course of the contract consistent with the transfer of
service to the customer. Where the costs, or a portion of these costs, are reimbursed by the customer, the amount received is
recognised as deferred revenue and allocated to the performance obligations within the contract and recognised as revenue over
the course of the contract.
Financing components
The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the
customer represents a financing component. As a consequence, the Group does not adjust any of the transaction prices for the
time value of money.
Warranties and defect periods
Generally construction and services contracts include defect and warranty periods following completion of the project. These
obligations are not deemed to be separate performance obligations and therefore the associated costs are estimated and included
in the total costs of the contracts. Where required, amounts are recognised in accordance with AASB 137: Provisions, contingent
liabilities and contingent assets.
Loss making contracts
Loss making contracts are recognised in accordance with AASB 137: Provisions, contingent liabilities and contingent assets as
onerous contracts.
b) Finance costs
Finance costs are recognised as expenses in the period in which they are incurred, except where they are included in the costs of
qualifying assets. The capitalisation rate used to determine the amount of finance costs to be capitalised to qualifying assets is the
weighted average interest rate applicable to the entity’s borrowings during the period.
Finance costs include interest on bank overdrafts and short-term and long-term borrowings, amortisation of discounts or premiums
relating to borrowings, amortisation of ancillary costs incurred in connection with the arrangement of borrowings, lease liability
charges and certain exchange differences arising from foreign currency borrowings.
c)
Income tax
Deferred tax assets are recognised for deductible temporary differences only if it is probable that future taxable amounts will be
available to utilise those temporary differences. The Group forms part of a tax consolidated group of which HOCHTIEF Australia
Holdings Limited, the ultimate Australian parent, is the head entity. The head entity recognises all of the current tax assets and
liabilities and deferred tax assets in respect of Australian tax losses of the tax consolidated group (after elimination of intra group
transactions). Deferred tax assets and liabilities in respect of temporary differences are recognised in the subsidiaries’ financial
statements.
The Tax Consolidated Group has entered into a tax funding agreement that requires wholly owned subsidiaries to make
contributions to the head entity for current tax assets and liabilities occurring after the implementation of tax consolidation. Under
the tax funding agreement, the contributions are calculated using the “group allocation” approach so that the contributions are
equivalent to the current tax balances generated by transactions entered into by wholly owned subsidiaries. The contributions are
payable as set out in the agreement and reflect the timing of the head entity’s obligations to make payments for tax liabilities to
the relevant tax authorities. The assets and liabilities arising under the tax funding agreement are recognised as intercompany
assets and liabilities with a consequential adjustment to current tax assets.
17
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
1. SUMMARY OF ACCOUNTING POLICIES CONTINUED
d) Non-derivative financial instruments
Non-derivative financial assets
Classification
(i)
The Group classifies its financial assets in the following measurement categories:
▪
▪
those to be measured subsequently at fair value (either through other comprehensive income, or profit or loss); and
those to be measured at amortised cost.
The classification depends on the Group’s business model for managing financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For
investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity
instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of
initial recognition to account for the equity investment at fair value through other comprehensive income. The Group reclassifies
debt investments when and only when its business model for managing those assets changes.
(ii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at fair value through profit or loss are expensed in profit or loss. Measurement of cash and cash equivalents
and trade and other receivables remains at amortised cost consistent with the comparative period.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, cash at bank and call deposits. For the purposes of the statement of cash flows,
net cash includes cash on hand, at bank and short term deposits at call, net of bank overdrafts where there is an ability to offset
and an intention to settle.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow
characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments as
follows:
▪
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments
of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at
amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or
impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
Fair value through other comprehensive income (FVOCI): Assets that are held for collecting contractual cash flows on specific
dates and through sales. A gain or loss on a debt investment that is subsequently measured at FVOCI is recognised in other
comprehensive income. None are currently held by the Group or at any point during the year.
Fair value through profit or loss (FVPL): Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair
value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or
loss and is not part of a hedging relationship is recognised in profit or loss and the net gain or loss is presented in the
statement of profit or loss within other gains/(losses) in the period in which it arises. None are currently held by the Group or
at any point during the year.
▪
▪
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair
value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value
gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be
recognised in profit or loss as other income when the Group’s right to receive payments is established. Changes in the fair value of
financial assets at fair value through profit or loss are recognised in other expenses in the statement of profit or loss as applicable.
Impairment
(iii)
The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised
cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables, contract debtors and lease receivables, the Group applies the simplified approach permitted by AASB 9:
Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables. The
methodology and basis for credit risk evaluation and impairment is detailed in Note 34(b): Financial instruments – Financial risk
management.
18
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
1. SUMMARY OF ACCOUNTING POLICIES CONTINUED
d) Non-derivative financial instruments continued
Non-derivative financial liabilities
Interest bearing liabilities
All loans and borrowings are initially recognised at fair value, being the amount received less attributable transaction costs. After
initial recognition, interest bearing liabilities are stated at amortised cost with any difference between cost and redemption value
being recognised in the statement of profit or loss over the period of the borrowings on an effective interest basis.
Trade and other payables
Liabilities are recognised for amounts to be paid for goods or services received. Trade payables are settled on terms aligned with
the normal commercial terms in the Group’s countries of operation.
e) Derivative financial instruments
Derivative financial instruments are stated at fair value, with changes in fair value recognised in the profit or loss. Where derivative
financial instruments qualify for hedge accounting, recognition of changes in fair value depends on the nature of the item being
hedged. Hedge accounting is discontinued when the hedging relationship is revoked, the hedging instrument expires, is sold,
terminated, exercised, or no longer qualifies for hedge accounting.
The Group documents at the inception of the hedging transaction the economic relationship between hedging instruments and
hedged items including whether the instrument is expected to offset changes in cash flows of hedged items. The Group documents
its risk management objective and strategy for undertaking various hedge transactions at the inception of each hedge relationship.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in
the cash flow hedge reserve within equity, limited to the cumulative change in fair value of the hedged item on a present value
basis from the inception of the hedge. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss,
within other expenses.
When option contracts are used to hedge forecast transactions, the Group designates only the intrinsic value of the option contract
as the hedging instrument. Gains or losses relating to the effective portion of the change in intrinsic value of the option contracts
are recognised in the cash flow hedge reserve in equity. The changes in the time value of the option contracts that relate to the
hedged item (‘aligned time value’) are recognised within other comprehensive income in the costs of hedging reserve within equity.
When forward contracts are used to hedge forecast transactions, the Group generally designates only the change in fair value of
the forward contract related to the spot component as the hedging instrument. Gains or losses relating to the effective portion of
the change in the spot component of the forward contracts are recognised in the cash flow hedge reserve in equity. The change in
the forward element of the contract that relates to the hedged item is recognised within other comprehensive income in the costs
of hedging reserve within equity. In some cases, the entity may designate the full change in fair value of the forward contract
(including forward points) as the hedging instrument. In such cases, the gains or losses relating to the effective portion of the
change in fair value of the entire forward contract are recognised in the cash flow hedge reserve within equity.
When cross-currency contracts are used to hedge cross-currency risk for both principal and interest for the life of the exposure, the
Group typically uses cross currency interest rate swaps to convert long term foreign currency borrowings into AUD to meet the
principal and interest obligations under the swaps. The change in the currency basis spread element of the contract that relates to
the hedged item is recognised within other comprehensive income in the costs of hedging reserve within equity.
When cross-currency contracts are used to hedge forecast transactions, the Group typically will designate the change in fair value
of the cross-currency contract related to the spot component as the hedging instrument. Gains or losses relating to the effective
portion of the change in the spot component of the cross-currency contracts are recognised in the cash flow hedge reserve in
equity. The change in the currency basis spread element of the contract that relates to the hedged item is recognised within other
comprehensive income in the costs of hedging reserve within equity.
Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss, as follows:
▪
the gain or loss relating to the effective portion of forward and option contracts are ultimately recognised in profit or loss as
the hedged item affects profit or loss within expenses.
the gain or loss relating to the effective portion of the interest rate swaps hedging variable rate borrowings is recognised in
profit or loss within ‘finance cost’ as the hedged item affects profit or loss within expenses.
▪
19
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
1. SUMMARY OF ACCOUNTING POLICIES CONTINUED
e) Derivative financial instruments continued
When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting,
any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast
transaction occurs, resulting in the recognition of a non-financial asset such as inventory. When the forecast transaction is no
longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately
reclassified to profit or loss. Hedge ineffectiveness is recognised in profit or loss within other expenses.
Put and call options to acquire assets
Put and call options are accounted for as derivatives in accordance with AASB 9 and are therefore held at fair value through profit
and loss in the financial statements each period.
f)
Inventories
Inventories are carried at the lower of cost and net realisable value and comprise of the following.
Property developments
Cost includes the costs of acquisition, development and holding costs such as rates, taxes and finance costs. Holding costs on
property developments not under active development are expensed as incurred.
Raw materials and consumables
Cost is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them
to their existing condition and location.
g) Assets held for sale and liabilities associated with assets held for sale
Assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale
transaction, rather than through continuing use, and a sale is considered highly probable. They are measured at the lower of their
carrying amount and fair value less costs to sell.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to
sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative
impairment loss previously recognised.
Assets classified as held for sale are presented separately from the other assets in the statement of financial position. Assets are
not depreciated or amortised while they are classified as held for sale.
Interest and other expenses attributable to the liabilities associated with assets held for sale continue to be recognised.
h) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. The balance includes
right of use assets as discussed in i) Leases below.
Depreciation and amortisation
Depreciation and amortisation is calculated so as to write-off the net book values of property, plant and equipment over their
estimated effective useful lives as follows:
▪ freehold buildings: straight line method - up to 40 years;
▪ major plant and equipment: cumulative number of hours worked - up to 10 years;
▪ major plant and equipment: component parts: cumulative number of hours worked - up to 10 years;
▪ leased plant and equipment: cumulative number of hours worked - up to 10 years;
▪ office and other equipment: diminishing value method - up to 10 years; and
▪ leasehold buildings and improvements: straight line method, over the terms of the leases - up to 40 years.
Subsequent costs
Subsequent expenditure is included in the carrying amount of property, plant and equipment only when it is probable that the
associated future economic benefits will flow to the Group. All other costs are recognised in the statement of profit or loss.
20
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
1. SUMMARY OF ACCOUNTING POLICIES CONTINUED
i)
Leases
The Group as Lessee
The Group assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In such
instances, the Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements, except
for short term leases, cancellable leases that if cancelled by the lessee the losses associated with the cancellation are borne by the
lessor and low value leased assets. For these leases, the Group recognises the lease payments as an operating expense on a
straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which
economic benefits from the leased assets are consumed.
The Group has a significant lease portfolio, comprising predominately property, plant, mining equipment and fleet vehicle rentals.
The Group’s operational involvement includes construction and services for which leased equipment is an important component of
the business.
Measurement and presentation of lease liability
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental
borrowing rate.
The following items are also included in the measurement of the lease liability:
▪
▪
▪
▪
▪
fixed lease payments offset by any lease incentives;
variable lease payments, for lease liabilities, which are tied to a floating index;
the amounts expected to be payable to the lessor under residual value guarantees;
the exercise price of purchase options (if it is reasonably certain that the option will be exercised); and
payments of penalties for terminating leases, if the lease term reflects the lease terminating early.
The lease liability is separately disclosed on the statement of financial position. The liabilities which will be repaid within twelve
months are recognised as current and the liabilities which will be repaid in excess of twelve months are recognised as non-current.
The lease liability is subsequently measured by reducing the balance to reflect the principal lease repayments made and increasing
the carrying amount by the interest on the lease liability.
The Group is required to remeasure the lease liability and make an adjustment to the right-of-use asset in the following instances:
the term of the lease has been modified or there has been a change in the Group’s assessment of the purchase option being
▪
exercised, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount
rate;
a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability
is remeasured by discounting the revised lease payments using a revised discount rate; and
the lease payments are adjusted due to changes in the index or a change in expected payment under a guaranteed residual
value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate.
However, if a change in lease payments is due to a change in a floating interest rate, a revised discount rate is used.
▪
▪
Measurement and presentation of right-of-use asset
The right-of-use assets recognised by the Group comprise the initial measurement of the related lease liability, any lease payments
made at or before the commencement of the contract, less any lease incentives received and any direct costs. Costs incurred by the
Group to dismantle the asset, restore the site or restore the asset are included in the cost of the right-of-use asset.
It is subsequently measured under the cost model with any accumulated depreciation and impairment losses applied against the
right-of-use asset. If the cost of the right-of-use asset reflects that the Group will exercise a purchase option, the right-of-use asset
is depreciated from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Group depreciates
the asset over the shorter period of either the useful life of the asset or the lease term. The depreciation starts at the
commencement date of the lease and the carrying value of the asset is adjusted to reflect the accumulated depreciation balance.
Any remeasurement of the lease liability is also applied against the right-of-use asset value.
The right-of-use assets are presented within Property, Plant and Equipment in the statement of financial position.
21
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
1. SUMMARY OF ACCOUNTING POLICIES CONTINUED
i)
Leases continued
The Group as Lessor
The Group enters into lease agreements as a lessor with respect to some property subleases as well as renting equipment to its
partners, suppliers and contractors.
The leases entered into by the Group are recognised as either finance or operating leases. If the terms of the lease agreement
transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. If this is not
the case, then the lease is recognised as an operating lease. The income received from operating leases is recognised on a straight-
line basis over the lease term. Initial direct costs incurred in negotiating and arranging operating leases are included in the carrying
amount of the leased asset. Amounts due from lessees under finance leases are recognised as receivables.
j)
Business combinations
The acquisition method of accounting is used to account for all business combinations. The consideration for the acquisition of a
controlled entity comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the
Group. The consideration transferred also includes the fair value of any pre-existing equity interest in the controlled entity.
Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities assumed in a business combination
are measured at their fair values at the acquisition date. On an acquisition by acquisition basis, the Group recognises any non-
controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree’s net
identifiable assets. The excess of the consideration transferred over the fair value of the Group's share of the net identifiable
assets acquired is recorded as goodwill.
Where the consideration is less than the fair value of the net identifiable assets of the controlled entity acquired, the difference is
recognised directly in the statement of profit or loss as a gain on acquisition of a controlled entity.
k)
Intangible assets
Goodwill
Goodwill arising from business combinations is included in intangible assets. Goodwill on acquisition of associates is included in
equity accounted investments. Goodwill is not amortised but it is tested for impairment annually or more frequently if there is an
indication that it might be impaired. Goodwill is allocated to cash-generating units for the purpose of impairment testing.
Customer contracts
Customer contracts acquired as part of a business combination are recognised separately from goodwill. Customer contracts are
carried at their fair value at the date of acquisition less accumulated amortisation and any impairment losses. Where customer
contracts’ useful lives are assessed as indefinite, the customer contract is not amortised but is tested for impairment annually, or
more frequently whenever there is an indication that it might be impaired. Where customer contracts’ useful lives are assessed as
finite, the customer contracts are amortised over their estimated useful lives.
IT systems
Costs incurred in developing systems and in acquiring software and licenses that are controlled by the Group that will provide
future economic benefits are capitalised to other intangible assets. Costs capitalised include external direct costs of materials and
services and directly attributable internal labour.
IT systems are amortised over their estimated useful lives of up to 10 years. IT systems are carried at cost less accumulated
amortisation and any impairment losses.
Costs related to access, configuration and customisation of unrestricted use Software as a Service arrangements are recognised as
an operating expense.
22
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
1. SUMMARY OF ACCOUNTING POLICIES CONTINUED
l)
Impairment
The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether there is any indication of
impairment. If any such indication exists, the asset’s recoverable amount is estimated. The recoverable amount of goodwill and
indefinite life intangible assets are reviewed at each reporting date irrespective of an indication of impairment.
An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. An asset’s recoverable
amount is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset. The recoverable amount for an asset that does not generate largely independent cash flows is
determined for the cash-generating unit to which the asset belongs.
Impairment losses are recognised in the statement of profit or loss unless the asset has been previously revalued, in which case the
impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised in the statement
of profit or loss. Reversals of impairment losses, other than in respect of goodwill and FVOCI instruments, are recognised in the
statement of profit or loss.
m) Employee benefits
Liabilities in respect of employee benefits, which are not due to be settled within twelve months are discounted at period end using
rates that most closely match the terms of maturity of the related liabilities. Corporate bond rates are utilised where a deep market
exists. Rates from national government securities are utilised where a deep market for corporate bonds does not exist.
Wages, salaries, annual and long service leave
The provision for employee entitlements to wages, salaries and annual and long service leave represents the amount which the
Group has a present obligation to pay resulting from employees’ services provided up to the reporting date. Provisions have been
calculated based on expected wage and salary rates and include related on-costs. In determining the liability for these employee
entitlements, consideration is given to estimated future increases in wage rates, and the Group’s experience with staff departures.
Share-based payment transactions
The Group’s ultimate controlling parent entity, Actividades de Construcción y Servicios, SA (ACS), established a Long-Term Incentive
Plan for the period 2023 to 2028 (the Plan). ACS granted stock options to CIMIC Executive Board members and certain executives in
the CIMIC Group in 2023. The Plan will be settled by ACS using its own equity, and with no obligation by CIMIC to fund the scheme.
As such the Plan is considered to be equity settled in accordance with AASB 2: Share-based Payment. CIMIC recognises employee
expense and a corresponding deemed capital contribution from ACS.
Superannuation
Defined contribution superannuation plans exist to provide benefits for eligible employees or their dependants. Contributions by
the Group are expensed to the statement of profit or loss as incurred.
Retention arrangements
Retention arrangements are in place certain key employees which are payable upon completion of the retention period.
The provisions are accrued on a pro-rata basis during the retention period and have been calculated based on salary rates, including
related on-costs.
Annual bonus and deferred incentive arrangements
Annual bonuses and deferred incentives are provided at reporting date and include related on-costs. The Group recognises a
provision where there is a contractual or constructive obligation.
n) Share capital
Ordinary share capital
Issued and paid up capital is recognised at its par value, being the consideration received by the Company.
Dividends
Provision is not made for dividends unless the dividend has been declared by the Directors, but not distributed, at or before the end
of the period.
23
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
1. SUMMARY OF ACCOUNTING POLICIES CONTINUED
o) Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in Australian dollars. The functional currency of the Company is Australian
dollars.
Transactions
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions are recognised in the
statement of profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate as at the date of the initial transaction.
Non-monetary items measured at fair value are translated using the exchange rates at the date the fair value was determined.
Translation of controlled foreign entities
Assets and liabilities of controlled foreign entities are translated into the presentation currency at the rates of exchange at
reporting date and the statement of profit or loss is translated at the rates approximating foreign exchange rates ruling at the dates
of the transactions. The resulting exchange differences are taken directly to the foreign currency translation reserve. Exchange
gains and losses on transactions which form part of the net investments in foreign controlled entities together with any related
income tax effect are recognised in the foreign currency translation reserve on consolidation. On disposal of a foreign entity, the
deferred cumulative amount recognised in equity relating to that particular foreign entity is recognised in the statement of profit or
loss as part of the gain or loss on sale.
24
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
2. REVENUE
Construction revenue
Services revenue
Corporate and investments
Total revenue
3. EXPENSES
Materials
Subcontractors
Plant costs
Personnel costs
Depreciation and impairment of property, plant and equipment
Amortisation of intangibles
Net gain on sale of assets
Foreign exchange (loss) / gain
Lease payments
Design, engineering and technical consulting fees
Other expenses1
Total expenses
12 months to
December 2023
$m
12 months to
December 2022
$m
8,990.5
4,174.7
114.1
7,535.7
3,396.1
155.1
13,279.3
11,086.9
Note
12 months to
December 2023
$m
12 months to
December 2022
$m
14
15
(2,931.2)
(2,373.6)
(4,664.2)
(3,948.5)
(657.8)
(529.2)
(3,774.2)
(3,089.0)
(284.8)
(15.4)
8.7
(3.1)
(118.4)
(60.9)
(251.7)
(298.1)
(13.4)
3.6
1.2
(123.9)
(40.9)
(676.5)
(12,753.0)
(11,088.3)
1As previously disclosed, UGL, a wholly owned subsidiary of CIMIC, together with its consortium partners CH2M Hill Companies Limited
(CH2M) and General Electric Company, were contracted by JKC Australia LNG Pty Ltd (JKC) to carry out works relating to the construction
of a combined cycle power plant for the Ichthys LNG Project in the Northern Territory. In January 2017, the UGL-CH2M JV Consortium
terminated their contract with JKC for the design, construction, and commissioning of the combined cycle power plant (CCPP Contract).
On 11 April 2022, CIMIC entered into a conditional, confidential commercial agreement with its consortium partners and JKC resulting in a
full and final settlement of all matters in connection with the CCPP Contract (the Settlement). CIMIC paid an amount of $192.5 million in
April 2022 and paid an additional amount of $300.0 million in March 2023, as its contribution to the Settlement. This was reflected in the
interim period ended 30 June 2022.
25
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
4. NET FINANCE INCOME / (COSTS)
Finance income
Interest and other
Total finance income
Finance costs
Debt interest expense
Finance charge for lease liabilities
Facility fees, bonding and other finance costs
Impact of discounting
Total finance costs
Net finance costs
5. AUDITORS’ REMUNERATION
Deloitte Touche Tohmatsu and related network firms
Audit or review of financial reports
Other services
Total services
Other auditors and their related network firms
Audit or review of financial reports
Total services
12 months to
December 2023
$m
12 months to
December 2022
$m
78.2
78.2
35.2
35.2
(183.1)
(115.0)
(11.9)
(49.2)
(19.3)
(13.1)
(40.7)
(14.9)
(263.5)
(183.7)
(185.3)
(148.5)
12 months to
December 2023
$’000
12 months to
December 2022
$’000
3,155
119
3,274
26
26
3,448
124
3,572
25
25
The Group may use its auditor, Deloitte Touche Tohmatsu for non-statutory audit related services to utilise their expertise and
experience with the Group. These assignments are assessed and approved in accordance with the Group’s External Auditor
Independence Charter.
26
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
6. INCOME TAX EXPENSE
Income tax expense recognised in the statement of profit or loss
Current tax expense
Deferred tax expense
(Under) / over provision in prior periods
Total income tax expense in statement of profit or loss
Deferred tax recognised directly in equity
Revaluation of cash flow and net investment hedges
Revaluation of investments
Total deferred tax benefit / (expense) recognised in equity
Reconciliation of prima facie tax to income tax expense
Profit before tax
12 months to
December 2023
$m
12 months to
December 2022
$m
(103.8)
67.4
(19.2)
(55.6)
2.8
3.5
6.3
118.8
(240.7)
(2.7)
(124.6)
(3.9)
(5.2)
(9.1)
494.3
550.8
Prima facie income tax expense at 30% (31 December 2022: 30%)
(148.3)
(165.2)
The following items have affected income tax expense for the year:
- Movement in provision for taxes on retained earnings of controlled entities
- Equity accounted and joint venture income tax differential
- Overseas income tax differential and foreign exchange
-
Financial investments differential
- Capital benefits recognised
- Other1
Current period income tax expense
(Under) / over provision in prior periods
Income tax expense
-
46.8
9.3
17.2
8.9
29.7
13.1
50.8
(27.1)
7.8
-
(1.3)
(36.4)
(121.9)
(19.2)
(2.7)
(55.6)
(124.6)
1Includes income tax expense from tax losses not recognised of $68.8 million (31 December 2022: $61.9 million) and tax consolidation
adjustment benefit of $99.6 million (31 December 2022: $73.9 million) - refer to Note 1: Summary of accounting policies - accounting
estimates and judgements – Income tax, and other adjustments of $1.1 million expense (31 December 2022: $1.8 million expense).
27
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
7. CASH AND CASH EQUIVALENTS
Funds on deposit
Cash at bank and on hand
Cash and cash equivalents
December 2023
$m
December 2022
$m
649.8
1,849.1
2,498.9
859.0
1,710.0
2,569.0
As at 31 December 2023: $570.2 million (31 December 2022: $700.1 million) of cash at bank is restricted. It includes cash subject to
certain operational restrictions of $281.9 million (31 December 2022: $393.6 million) as well as cash in relation to the sale of
receivables of $288.3 million (31 December 2022: $306.5 million). The receivables only include certified amounts with the factoring
done on a non-recourse basis.
8. TRADE AND OTHER RECEIVABLES
Contract receivables
Contract assets
Retentions and capitalised costs to fulfil contracts
Total contract debtors
Trade debtors
Other amounts receivable
Prepayments
Derivative financial assets
Amounts receivable from related parties
Total trade and other receivables
Current
Non-current
Total trade and other receivables
Additional information on contract debtors
Total contract debtors - trade and other receivables
Total contract liabilities - trade and other payables
Net contract debtors
Note
December 2023
$m
December 2022
$m
34 (c)
36 (b)
380.1
1,970.6
128.4
2,479.1
210.1
349.9
216.2
28.5
191.1
3,474.9
3,135.8
339.1
3,474.9
317.5
1,770.1
117.2
2,204.8
219.6
363.3
103.5
4.2
325.2
3,220.6
2,806.5
414.1
3,220.6
December 2023
$m
December 2022
$m
2,479.1
(1,673.0)
806.1
2,204.8
(2,142.7)
62.1
28
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
8. TRADE AND OTHER RECEIVABLES CONTINUED
Significant changes in contract assets and liabilities
Contract assets are balances due from customers under long term contracts as work is performed and therefore a contract asset is
recognised over the period in which the performance obligation is fulfilled. This represents the entity’s right to consideration for
the services transferred to date. Amounts are generally reclassified to contract receivables when these have been certified or
invoiced to a customer.
Revenue recognised in the reporting period that was included in the contract liability balance at the beginning of the period was
$1,858.7 million (31 December 2022: $1,512.2 million). Revenue recognised in the reporting period from performance obligations
satisfied or partially satisfied in previous periods was $44.3 million (31 December 2022: $13.2 million). Partially satisfied
performance obligations continue to incur revenue and costs in the period.
Remaining performance obligations (Work in hand)
Contracts with remaining performance obligations as at 31 December 2023 are set out below.
Construction
Services
Corporate and Investments
Work in hand1
1Includes $8,591 million (31 December 2022: $8,124 million) of CIMIC’s share of work in hand from joint ventures and associates
which are equity accounted investments.
31,723
30,426
December 2023
$m
16,397
10,074
5,252
December 2022
$m
15,870
9,631
4,925
Contracts in the different sectors have different lengths. The average duration of contracts is given below, however some contracts
will vary from these typical lengths. Revenue is typically earned over these varying timeframes, however more of the revenue
noted above is expected to be earned in the earlier years.
Construction
Services
Corporate and Investments
1-4 years
4-10 years
3-7 years
9. CURRENT TAX ASSETS
The current tax asset of $156.6 million (31 December 2022: $154.2 million) represents the amount of income taxes recoverable
from the payment of tax in excess of the amounts due to the relevant tax authority.
29
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
10. INVENTORIES
Property developments
Cost of acquisition
Development expenses capitalised
Rates, taxes, finance and other costs capitalised1
Total property developments
Other inventories
Raw materials and consumables at cost
Total raw materials and consumables
Total inventories
Current
Non-current
Total inventories
December 2023
$m
December 2022
$m
6.4
73.9
19.0
99.3
6.5
67.8
19.3
93.6
227.0
227.0
244.2
244.2
326.3
337.8
259.0
67.3
326.3
269.4
68.4
337.8
1Finance costs capitalised to property developments during the period were $1.0 million (31 December 2022: $1.6 million).
11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Associates
Joint venture entities
Total investments accounted for using the equity method
December 2023
$m
December 2022
$m
Note
25
26
262.5
1,630.9
1,893.4
263.2
1,554.1
1,817.3
30
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
12. OTHER INVESTMENTS
Financial assets at fair value through profit or loss
Unlisted investments1
Total other financial assets at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Listed investments2,3
Total other financial assets at fair value through other comprehensive income
Investment property at fair value through profit or loss
Investment property
Total investment property at fair value through profit or loss
December 2023
$m
December 2022
$m
Note
34 (c)
34 (c)
291.0
291.0
5.9
5.9
23.2
23.2
215.8
215.8
677.0
677.0
23.0
23.0
Current
Non-current
Total other investments
1During the prior year CIMIC subscribed to Class C preference shares in Thiess totalling $191.3 million. The Class C preference
shares provide a coupon return which, when declared by Thiess Group, is ranked above all other equity instruments. The Class C
preference shares are considered a long-term interest in Thiess which are not measured using equity method under AASB 128:
Investments in Associates and Joint Ventures and therefore are accounted for as an equity instrument in accordance with AASB 9:
Financial Instruments. CIMIC has elected to recognise changes in the value of the Class C preference shares through profit or loss
and the coupon, in the form of a dividend, will be recognised as an operating cash flow. In the year ending 31 December 2023, the
Company received a dividend from Thiess Class C shares of $5.0 million (31 December 2022: $nil).
-
320.1
320.1
-
915.8
915.8
2During the year CGI3 Pty Limited, a wholly owned subsidiary of CIMIC, sold 100% of its investment in Ventia Services Group
Limited (‘Ventia’) across four tranches. As the investment was accounted for as a financial investment measured at fair value
through other comprehensive income prior to disposal, no gain was recognised in the statement of profit or loss in respect of the
sale of Ventia for the year ended 31 December 2023.
3During the prior year as CIMIC lost significant influence over its investment in Ventia CIMIC reclassified its investment in Ventia
from an associate to a financial investment measured at fair value through other comprehensive income. This resulted in a non-
cash one off gain of $501.7 million which was presented in ‘other gains’ in the consolidated statement of profit or loss in the year
ended 31 December 2022.
31
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
13. DEFERRED TAXES
Recognised deferred tax assets / (liabilities)
Deferred tax assets are attributed to the following:
Contract debtors
Property developments
Other inventories
Property, plant and equipment
Employee benefits
Contract profit differential
Investment revaluations
Joint ventures and associates
Foreign exchange
Tax losses1
Other
Total deferred taxes
Comprising of:
Deferred tax assets
Deferred tax (liabilities)
Net deferred taxes2
December 2023
$m
December 2022
$m
102.1
19.4
3.0
37.0
88.9
(33.9)
(14.2)
-
7.2
44.3
43.3
297.1
357.1
(60.0)
297.1
136.5
34.8
(15.5)
20.1
80.5
(27.4)
(10.7)
(64.2)
6.2
39.2
34.6
234.1
364.8
(130.7)
234.1
Unrecognised deferred tax assets
Deferred tax assets which have not been recognised in respect of tax losses
265.1
209.9
131 December 2023 includes $35.4 million (31 December 2022: $15.6 million) of carried forward tax losses with no expiry date in
respect of an overseas tax jurisdiction that incurred taxable losses. Utilisation of these losses through future taxable profits is
supported by forecast performance, with reference to the current levels of work in hand and pipeline. As head of the Australian Tax
Consolidated Group, HOCHTIEF Australia Holdings Limited (CIMIC’s ultimate Australian parent entity) holds on behalf of CIMIC
deferred tax assets of $175.5 million (31 December 2022: $259.7 million). These amounts are included within amounts receivable
from parent in note 36 (b) and represent tax losses generated by CIMIC and transferred to HOCHTIEF Australia Holdings Limited for
utilisation against future taxable income.
2CIMIC has the right to offset deferred tax assets and deferred tax liabilities on a jurisdictional basis and is accordingly presented on
a net basis.
32
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
14. PROPERTY, PLANT AND EQUIPMENT
At 1 January 2022
Cost
Accumulated depreciation
Net book amount
Year ended 31 December 2022
Opening net book amount
Additions
Disposals
Depreciation
Effects of foreign exchange fluctuations
Closing net book amount
Year ended 31 December 2022
Cost
Accumulated depreciation and impairment
Net book amount
Year ended 31 December 2023
Opening net book amount
Additions
Divestment of subsidiary and disposals
Depreciation
Effects of foreign exchange fluctuations
Closing net book amount
Year ended 31 December 2023
Cost
Accumulated depreciation and impairment
Net book amount
Leasehold
land, buildings
and
improvements
$m
Plant and
equipment
Right-of-use
land and
buildings
Right-of-use
plant and
equipment
Total property,
plant and
equipment
$m
$m
$m
$m
74.3
(49.5)
24.8
1,088.6
(682.0)
406.6
490.6
(299.0)
191.6
64.3
(47.7)
16.6
1,717.8
(1,078.2)
639.6
24.8
2.1
-
(6.9)
-
20.0
74.0
(54.0)
20.0
20.0
1.9
(0.5)
(5.7)
-
15.7
72.4
(56.7)
15.7
406.6
177.5
(22.0)
(221.9)
4.8
345.0
1,090.4
(745.4)
345.0
345.0
249.1
(56.5)
(206.0)
-
331.6
1,022.5
(690.9)
331.6
191.6
47.4
(0.5)
(59.0)
0.4
179.9
523.5
(343.6)
179.9
179.9
59.9
(14.5)
(61.3)
-
164.0
502.5
(338.5)
164.0
16.6
15.6
(0.1)
(10.3)
-
21.8
75.4
(53.6)
21.8
21.8
14.1
-
(11.8)
-
24.1
66.2
(42.1)
24.1
639.6
242.6
(22.6)
(298.1)
5.2
566.7
1,763.3
(1,196.6)
566.7
566.7
325.0
(71.5)
(284.8)
-
535.4
1,663.6
(1,128.2)
535.4
33
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
15. INTANGIBLES
At 1 January 2022
Cost or fair value
Accumulated amortisation and impairment
Net book amount
Year ended 31 December 2022
Opening net book amount
Additions / acquisitions
Disposals
Amortisation
Effects of foreign exchange fluctuations
Closing net book amount
Year ended 31 December 2022
Cost or fair value
Accumulated amortisation and impairment
Net book amount
Year ended 31 December 2023
Opening net book amount
Additions / acquisitions
Disposals
Amortisation
Effects of foreign exchange fluctuations
Closing net book amount
Year ended 31 December 2023
Cost or fair value
Accumulated amortisation and impairment
Net book amount
1Other intangibles include:
▪
▪
Goodwill
$m
Other intangibles1
$m
Total intangibles
$m
864.9
(13.6)
851.3
851.3
19.0
-
-
(6.5)
863.8
877.4
(13.6)
863.8
863.8
28.8
-
-
(1.3)
891.3
904.9
(13.6)
891.3
381.9
(317.8)
64.1
1,246.8
(331.4)
915.4
64.1
26.7
(0.4)
(13.4)
0.6
77.6
395.6
(318.0)
77.6
77.6
18.5
(0.7)
(15.4)
-
80.0
219.2
(139.2)
80.0
915.4
45.7
(0.4)
(13.4)
(5.9)
941.4
1,273.0
(331.6)
941.4
941.4
47.3
(0.7)
(15.4)
(1.3)
971.3
1,124.1
(152.8)
971.3
34
IT software systems of $30.3 million with a useful life of up to 10 years (31 December 2022: $25.9 million up to 10 years);
Customer contracts and other intangibles with useful lives of: 1 to 5 years $6.6 million (31 December 2022: $4.8 million); 6 to
15 years $21.7 million (31 December 2022: $25.5 million); and indefinite useful lives $21.4 million (31 December 2022: $21.4
million).
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
15. INTANGIBLES CONTINUED
Impairment tests for cash generating units containing goodwill
Goodwill is attributable to cash generating units as follows:
Construction
Services
Balance at reporting date
December 2023
$m
December 2022
$m
420.1
471.2
891.3
421.4
442.4
863.8
The recoverable amount of all cash-generating units is based on value in use calculations, using five year cash flow projections
based on forecast operating results. The recoverable amount of each cash-generating unit exceeds its carrying amount.
The key assumptions used in the value in use calculations and the approach to determining the recoverable amount of all cash-
generating units in the current and previous period are:
Market / cash-generating unit growth:
Economic forecasts, taking into account the Group’s participation in each market
Inflation / CPI rates and foreign currency
rates:
Economic forecasts
Discount rate:
Growth rate:
Risk in the industries and countries in which each unit operates
Relevant to the market conditions and business plan
Cash-generating units
Construction
Services
Cash-generating units
Construction
Services
December 2023
Discount rate
Growth rate
12%
8%
3%
3%
December 2022
Discount rate
Growth rate
13%
9%
3%
3%
Sensitivity to changes in assumptions
The recoverable amount of intangible assets exceeds their carrying values at 31 December 2023. Based on information available
and market conditions at 31 December 2023, a reasonably foreseeable change in the assumptions made in these assessments
would not result in an impairment. Macro-economic factors, such as interest rate movements, inflation and tight labour markets
were considered when determining the reasonableness of forecast assumptions. The Group considers that for the carrying value to
equal, or exceed, the recoverable amount, there would have to be unreasonable changes to key assumptions. The Group considers
the chances of these changes occurring to be unlikely.
35
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
16. TRADE AND OTHER PAYABLES
Trade creditors and accruals
Other creditors
Amounts payable to related parties
Trade and other payables
Note
December 2023
$m
December 2022
$m
4,424.8
4,633.0
449.5
297.8
502.1
257.1
5,172.1
5,392.2
36 (b)
34 (a,b)
Derivative financial liabilities
34 (a,b)
14.3
27.6
Total trade and other payables
Current
Non-current
Total trade and other payables
17. CURRENT TAX LIABILITIES
5,186.4
5,419.8
5,007.4
179.0
5,186.4
5,203.7
216.1
5,419.8
The current tax liability of $24.4 million (31 December 2022: $14.1 million) represents the amounts payable in respect of current
and prior periods.
18. PROVISIONS
Employee benefits
Current
Non-current
Total provisions
December 2023
$m
December 2022
$m
294.1
19.7
313.8
268.9
18.2
287.1
Liabilities expected to be settled within 12 months are measured at their nominal value using the remuneration rate expected to
apply at the time of settlement. Liabilities which are not expected to be settled within 12 months are measured as the present
value of the estimated future cash outflows to be made by the Group.
36
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
19. INTEREST BEARING LIABILITIES
Current interest bearing loans
Non-current interest bearing loans
Total interest bearing liabilities
20. LEASE LIABILITIES
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
Note
December 2023
$m
December 2022
$m
-
3,045.0
3,045.0
110.1
3,235.2
3,345.3
34
Note
December 2023
$m
December 2022
$m
82.6
154.8
237.4
75.3
189.3
264.6
34
Extension options
Certain leases contain extension options exercisable by the Group up to one year before the end of the non-cancellable contract
period. Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility.
The extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease commencement
whether it is reasonably certain to exercise the extension options, and where it is reasonably certain, the extension period has been
included in the lease liability. The Group reassesses whether it is reasonably certain to exercise the options if there is a significant
event or significant change in circumstances within its control.
37
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
21. SHARE CAPITAL
Issued and fully paid share capital
Balance at beginning of reporting period
Balance at reporting date
Share capital
Balance at beginning of reporting period
Balance at reporting date
Company
December 2023
No. of shares
December 2022
No. of shares
311,296,286
311,296,286
311,296,286
311,296,286
Company
12 months to
December 2023
$m
12 months to
December 2022
$m
1,458.7
1,458.7
1,458.7
1,458.7
Holders of ordinary shares are entitled to receive dividends, as declared from time to time, and are entitled to one vote per share
at shareholders’ meetings. In the event of winding up of the Company, ordinary shareholders rank after creditors and are fully
entitled to any proceeds of liquidation.
38
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
22. RESERVES
Foreign currency translation reserve
Balance at beginning of reporting period
Included in statement of other comprehensive income
Balance at reporting date
Hedging reserve
Balance at beginning of reporting period
Included in statement of other comprehensive income
Balance at reporting date
Equity reserve
Balance at beginning of reporting period
Acquisition of non-controlling interests
Balance at reporting date
Fair value through other comprehensive income reserve
Balance at beginning of reporting period
Included in statement of other comprehensive income
Transfer to retained earnings on disposal
Balance at reporting date
Share buy-back reserve
Balance at beginning of reporting period
Premium paid over issue value on share buy-back
Balance at reporting date
Share based payments reserve
Balance at beginning of reporting period
Included in statement of profit or loss
Balance at reporting date
Other
Balance at beginning of reporting period
Included in statement of profit or loss
Balance at reporting date
12 months to
December 2023
$m
12 months to
December 2022
$m
245.0
3.4
248.4
125.7
(36.2)
89.5
194.6
50.4
245.0
(6.2)
131.9
125.7
(704.3)
(704.3)
-
-
(704.3)
(704.3)
(14.0)
7.4
4.6
(2.0)
-
(14.0)
-
(14.0)
(130.1)
(130.1)
-
-
(130.1)
(130.1)
28.8
-
28.8
-
0.2
0.2
28.8
-
28.8
-
-
-
Total reserves at reporting date
(469.5)
(448.9)
39
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
22. RESERVES CONTINUED
Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve comprises foreign exchange differences arising from the translation of the financial
statements of operations where their functional currency is different to the presentation currency of the Group, as well as from
the translation of liabilities that hedge the Group’s net investment in foreign operations.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging
instruments relating to future transactions.
Equity reserve
The equity reserve accounts for the differences between the fair value of, and the amounts paid or received for, equity
transactions with non-controlling interests.
Fair value through other comprehensive income reserve
The fair value through other comprehensive income reserve comprises the fair value gains or losses on investments designated as
fair value through other comprehensive income.
Share buy-back reserve
The share buy-back reserve represents the excess above issue value of CIMIC shares that were purchased and subsequently
cancelled. The cancellation of the shares creates a non-distributable reserve.
Share based payments reserve
The share based payments reserve is used to recognise the fair value of share based payments issued to employees over the
vesting period, and to recognise the value attributable to the share based payments during the reporting period.
Other reserve
The other reserve is used to recognise the capital contribution from ACS in respect of the long-term incentive plan outlined in Note
35: Employee Benefits.
23. RETAINED EARNINGS
Closing balance of previous reporting period
Profit included in statement of profit or loss
Transfer from reserves
Dividends paid
Balance at reporting date
12 months to
December 2023
$m
12 months to
December 2022
$m
Note
433.1
435.2
(4.6)
(180.5)
683.2
241.0
425.6
-
(233.5)
433.1
24
40
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
24. DIVIDENDS
Dividends recognised in the reporting period to 31 December 2023
Interim 2023 dividend
31 December 2022 final dividend
Total dividends recognised in reporting period to 31 December 2023
Dividends recognised in the reporting period to 31 December 2022
30 June 2022 interim ordinary dividend
31 December 2021 final dividend
Total dividends recognised in reporting period to 31 December 2022
25. ASSOCIATES
The Group has the following investments in associates:
Cents per
share
$m
39.0
19.0
39.0
36.0
121.4
59.1
180.5
121.4
112.1
233.5
Name of entity
Principal activity
Country
CM2A Finance Pty Limited1
Canberra Metro 2A Holdings Pty Ltd
Canberra Metro Holdings Pty Ltd2
Canberra Metro Holdings Trust2
Metro Trains Australia Pty Ltd2
Metro Trains Sydney Pty Ltd2
On Talent Pty Ltd
Spark North East Link Holding Pty Limited2
Spark North East Link Pty Limited2
Torrens Connect Pty Ltd
Investment
Investment
Construction
Investment
Services
Services
Recruitment
Investment
Investment
Services
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ownership interest
December 2023
%
December 2022
%
38
38
38
30
20
20
30
20
20
23
100
-
38
30
20
20
30
20
20
23
All associates have a statutory reporting date of 31 December with the following exceptions:
1During the year ended 31 December 2023 the Group divested a 62% equity interest in its wholly owned subsidiary CM2A Finance
Pty Limited.
2Entities have a 30 June statutory reporting date.
41
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
25. ASSOCIATES CONTINUED
The Group’s share of associates’ results, assets and liabilities are as follows:
Revenue
Expenses
Profit before tax
Income tax expense
Profit for the period
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Equity accounted associates at reporting date
There were no impairments of equity accounted associates during the reporting period (31 December 2022: $nil).
262.5
In the opinion of the directors, there are no individually material associates as at 31 December 2023.
12 months to
December 2023
$m
12 months to
December 2022
$m
1,024.8
1,253.1
(976.1)
(1,186.2)
48.7
(6.4)
42.3
66.9
(13.7)
53.2
December 2023
$m
December 2022
$m
341.3
922.2
317.1
729.4
1,263.5
1,046.5
244.6
756.4
1,001.0
203.4
579.9
783.3
263.2
42
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
26. JOINT VENTURE ENTITIES
The Group has the following joint venture entities:
Name of entity
Principal activity
Country
Ownership interest
December 2023
%
December 2022
%
Australia
Services
Services
Services
Services
Investment
Investment
Investment
Contract Mining
Contract Mining
Services
Development
Development
Construction
Construction
Construction
Investment
Investment
Services
Construction
Investment
Investment
Investment
Construction
Investment
Services
Investment
Investment
Construction
Adelaide Metro Operations Pty Ltd
Auckland One Rail Limited
Australian Terminal Operations Management Pty Ltd
Canberra Metro Operations Pty Ltd
CIP Holdings General Partner Limited1
Cornerstone Infrastructure Partners Holding LP1
Glenrowan Solar Holdings Pty Ltd4
GSJV Guyana Inc1
GSJV SCC (formerly GSJV Limited (Barbados))1
IC Integrity Pty Ltd
Kings Square No.4 Unit Trust1
Kings Square Pty Ltd1
Leighton Abigroup Joint Venture1
Leighton-Infra 13 Joint Venture2
Leighton-Ose Joint Venture2
Momentum Trains Holding Pty Ltd1
Momentum Trains Holding Trust1
Mpeet Pty Limited
Mulba Mia Leighton Broad Joint Venture1
Pulse Partners Agent Pty Ltd1
Pulse Partners Holding Pty Ltd1
Pulse Partners Holding Trust1
Spark NEL DC Workforce Pty Ltd
Thiess Group Holdings Pty Ltd3
U-Go Mobility Pty Ltd
Wallan Project Pty Ltd1 (act as trustee of Wallan Project Trust)
Wallan Project Trust1
WSO M7 Stage 3 JV
All joint venture entities have a statutory reporting date of 31 December with the following exceptions as they are aligned
with the joint venture partners’ reporting date and / or the reporting date is prescribed by local statutory requirements:
1Entities have a 30 June statutory reporting date.
2Entities have a 31 March statutory reporting date.
3Thiess Group Holdings Pty Ltd is an intermediate holding company of Thiess Pty Ltd. The principal activity of Thiess Pty Ltd is
contract mining.
4During the year ended 31 December 2023 the Group divested a 49% equity interest in its wholly owned subsidiary Glenrowan
and entered into a joint venture arrangement with the acquirer. Refer to Note 29: Acquisitions and Disposals – Disposals.
New Zealand
Australia
Australia
New Zealand
New Zealand
Australia
Guyana
Barbados
Australia
Australia
Australia
Australia
India
India
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
50
50
50
50
40
40
51
50
50
49
50
50
50
50
50
49
49
50
50
49
49
49
33
50
50
49
49
50
50
50
50
50
40
40
100
50
50
49
50
50
50
50
50
49
49
50
50
49
49
49
33
50
50
49
49
50
Immaterial joint venture entities
Material Joint venture entity
Total joint venture entities
December 2023
$m
December 2022
$m
320.3
1,310.6
1,630.9
280.0
1,274.1
1,554.1
43
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
26. JOINT VENTURE ENTITIES CONTINUED
Immaterial joint ventures
The Group’s share of joint venture entities’ results, assets and liabilities are as follows:
Individually immaterial joint ventures
Summarised profit or loss
Revenue
Expenses
Finance income
Finance costs
Profit before tax
Income tax expense
Profit for the period
Individually immaterial joint ventures
Summarised balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
12 months to
December 2023
$m
12 months to
December 2022
$m
538.7
(471.1)
6.3
(49.3)
24.6
(1.0)
23.6
569.8
(494.0)
7.0
(53.2)
29.6
(1.5)
28.1
December 2023
$m
December 2022
$m
275.2
1,837.2
2,112.4
184.3
1,607.8
1,792.1
218.0
1,628.0
1,846.0
90.3
1,475.7
1,566.0
The Group’s share of joint venture entities’ net assets at reporting date
320.3
280.0
There were no impairments of investments in joint ventures during the reporting period (31 December 2022: $nil).
44
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
26. JOINT VENTURE ENTITIES CONTINUED
Material joint venture
The Group holds a 50:50 joint venture in Thiess Group Holdings Pty Ltd with funds advised by Elliott Advisors (UK) Ltd (“Elliott”).
Material joint ventures have been determined by comparing individual investment net book value with the total equity accounted
investment carrying value and share of profit, along with consideration of relevant qualitative factors. The table below provides
summarised financial information for Thiess Group Holdings Pty Ltd.
The information disclosed reflects the amounts presented in the financial statements of the relevant joint ventures and, where
indicated, the Group’s share of those amounts. They have been amended to reflect adjustments made by the Group when using
the equity method, including fair value adjustments and differences in accounting policies.
Thiess Joint Venture (at 100%)
Summarised profit or loss
Revenue
Other expenses
Depreciation and amortisation
Share of profit / (loss) of joint venture entities
Finance income
Finance costs
Profit before tax
Income tax expense
Profit for the period
Non-controlling interest
Profit for the year attributable to members of the parent entity
Other comprehensive income
Total comprehensive income
Group’s ownership interest
Group’s total share of:
Profit for the period1
Other comprehensive (loss) / income
Total comprehensive income
12 months to
December 2023
$m
12 months to
December 2022
$m
5,902.6
(4,432.1)
(828.1)
0.1
4.0
(218.4)
428.1
(112.7)
315.4
(2.2)
313.2
(4.1)
309.1
50%
87.4
(1.9)
85.5
3,949.5
(2,798.5)
(618.8)
(0.1)
1.6
(147.7)
386.0
(105.1)
280.9
(3.4)
277.5
62.8
340.3
50%
87.7
31.4
119.1
Dividends received
1The terms of the joint venture partners preferential entitlements to Thiess profits are outlined in Note 1: Summary of accounting
policies – accounting estimates and judgements – Investment in Thiess. Under accounting standards preferential returns must be
attributed first. Accordingly, from the Thiess full year result of $313.2 million, returns are first attributable to both CIMIC and
Elliott’s Class C preference shares ($22.9 million each), then to Elliott’s minimum distribution ($180.0 million) and then CIMIC's
profit share for the period is $87.4 million. The Thiess Shareholders Agreement prescribes a minimum distribution to each
shareholder of $180.0 million per annum for the first six years. CIMIC's shortfall profit amounts have protective rights and are
expected to be recovered through future earnings.
89.5
49.0
45
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
26. JOINT VENTURE ENTITIES CONTINUED
Material joint venture continued
Thiess Joint Venture (at 100%)
Summarised balance sheet
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current assets
Total non-current assets
Current liabilities
Financial liabilities (excluding trade payables)
Other current liabilities
Total current liabilities
Non-current liabilities
Financial liabilities (excluding trade payables)
Other non-current liabilities
Total non-current liabilities
Net assets (100%)
Less: non-controlling interests
Net assets attributable to members of the parent entity
31 December
2023
$m
31 December
2022
$m
277.8
1,473.9
1,751.7
5,216.7
5,216.7
403.2
1,057.6
1,460.8
2,088.8
311.1
2,399.9
3,107.7
(17.1)
3,090.6
254.8
1,352.4
1,607.2
5,072.8
5,072.8
324.6
1,046.2
1,370.8
1,993.6
280.8
2,274.4
3,034.8
(16.9)
3,017.9
Group’s share of net assets
During the prior year CIMIC subscribed to Class C preference shares in Thiess totalling $191.3 million. The Class C preference shares
are considered a long-term interest in Thiess and not measured using equity method under AASB 128: Investments in Associates
and Joint Ventures and therefore are required to be accounted as an equity instrument in accordance with AASB 9: Financial
Instruments. In addition to CIMIC’s share of the equity accounted profit of $87.4 million (31 December 2022: $87.7 million) CIMIC
has recognised $22.9 million (31 December 2022: $4.9 million) in profit in respect of its Class C preference shares.
1,310.6
1,274.1
46
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
27. JOINT OPERATIONS
The Group has the following interest in joint operations:
Name of arrangement
Principal activity
Country
Ownership interest
December 2023
%
December 2022
%
Construction
Construction
Construction
Acciona Construction Australia Pty Ltd & CPB Contractors Pty Ltd
Acciona Infrastructure & CPB Contractors Joint Venture (formerly
Leighton Abigroup Consortium (Epping to Thornleigh))
Acciona Construction Australia Pty Ltd & CPB Contractors Pty Limited &
Ghella Pty Ltd
AECOM Australia Pty Ltd & BG&E Pty Limited & Georgiou Group Pty Ltd &
Construction
GHD Pty Ltd & CPB Contractors Pty Limited
Construction
Baulderstone Leighton Joint Venture
Bintai - Leighton JV2
Construction
Construction
CH2-UGL JV
Construction
CPB & BMD JV
Construction
CPB & Bombardier JV
Construction
CPB & JHG JV
Construction
CPB & United Infrastructure JV
Construction
CPB BAM Ghella UGL Joint Venture
CPB Black & Veatch Joint Venture1
Construction
Construction
CPB Contractors & Georgiou Group
Construction
CPB Contractors & Spotless Facilities Services
CPB Contractors Pty Limited & DT Infrastructure Pty Ltd
Construction
CPB Contractors Pty Limited & DT Infrastructure Pty Ltd (NEWest Alliance) Construction
Construction
CPB Contractors Pty Limited & Ghella Pty Ltd Joint Venture
Construction
CPB Downer EDI JV
Construction
CPB Dragados Samsung Joint Venture
Construction
CPB Ghella UGL JV
Construction
CPB John Holland Dragados Joint Venture
Construction
CPB Samsung John Holland Joint Venture
Construction
CPB Seymour Whyte JV
Construction
CPB Southbase JV
Construction
First Balfour-Leighton Joint Venture
Construction
Gammon - Leighton Joint Venture
Construction
GE Betz Pty Limited & McConnell Dowell Constructors (Aust) Pty Ltd &
United Group Infrastructure Pty Ltd
HYLC Joint Venture1
IEC Boardwalk JV
JH & CPB & Ghella JV
John Holland and UGL Infrastructure
John Holland Pty Ltd, UGL Engineering Pty Ltd and GHD Pty Ltd trading as
Malabar Alliance
Leighton-First Balfour Joint Venture
Leighton-First Balfour Joint Venture
Leighton - Able Joint Venture
Leighton - China State - Van Oord Joint Venture
Leighton - China State Joint Venture
Leighton - China State Joint Venture
Leighton - Chubb E&M Joint Venture
Leighton - Chun Wo Joint Venture
Leighton - Chun Wo Joint Venture
Leighton - Chun Wo Joint Venture
Leighton - Gammon Joint Venture
Leighton - HEB Joint Venture
Leighton - Total Joint Operation
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Australia
Australia
Australia
Australia
Australia
Singapore
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Philippines
Hong Kong
Australia
Australia
Hong Kong
Australia
Australia
Australia
Philippines
Philippines
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
New Zealand
Indonesia
50
50
40
68
-
-
50
50
-
50
75
54
50
50
50
67
50
75
67
40
78
50
33
50
60
40
50
50
50
34
45
50
50
65
50
51
45
51
51
50
84
60
70
50
80
67
50
50
-
-
50
49
50
50
50
50
75
54
50
50
50
-
-
-
67
40
78
50
33
50
60
-
50
50
50
34
45
50
50
-
-
51
45
51
51
50
84
60
70
50
80
67
47
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
27. JOINT OPERATIONS CONTINUED
Name of arrangement
Principal activity
Country
Ownership interest
December 2023
%
December 2022
%
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Services
Leighton China State Joint Venture (Wynn Resort)
Leighton Contractors Downer Joint Venture1
Leighton Fulton Hogan Joint Venture (Sapphire to Woolgoolga)1
Leighton Fulton Hogan Joint Venture (Sh16 Causeway Upgrade)
Leighton John Holland Joint Venture
Leighton M&E – Southa Joint Venture
Leighton Yongnam Joint Venture
Leighton York Joint Venture
LLECPB Crossing Removal JV
Manidis Roberts Pty Limited & MWH Australia Pty Ltd & PB Australia
Pty Limited & United Group Infrastructure Pty Ltd
Metropolitan Road Improvement Alliance
Mitsubishi Electric Australia Pty Ltd & Hyundai Rotem Company & UGL Rail
Services Pty Limited
Murray & Roberts Marine Malaysia - Leighton Contractors Malaysia Joint
Venture1
NRT - Design & Delivery JV
NRT - Infrastructure Joint Venture
NRT Systems JV
OWP Joint Venture (Optus Wireless JV)
Parsons Brinckerhoff Australia Pty Limited & RPS Manidis Roberts Pty Ltd
& Seymour Whyte Constructions Pty Ltd & UGL Engineering Pty Limited
PTA Radio
Rizzani CPB Joint Venture
Spark NEL DC JV
UGL Cape
UGL Kentz
Veolia Water - Leighton - John Holland Joint Venture
WSP Australia Pty Limited & UGL Engineering Pty Limited
All joint operations have a reporting date of 31 December with the following exceptions:
Services
Construction
Construction
Services
Construction
Construction
Services
Construction
Construction
Services
Services
Construction
Construction
Services
Construction
Macau
Australia
Australia
New Zealand
Singapore
Hong Kong
Singapore
Australia
Australia
Australia
Australia
Australia
Malaysia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Australia
50
50
50
50
50
50
-
75
50
60
71
17
50
50
50
40
50
33
44
50
28
50
50
24
50
50
50
50
50
50
50
70
75
50
60
71
14
50
50
50
40
50
33
44
50
28
50
50
24
50
1Arrangements have a 30 June reporting date. These entities have different statutory reporting dates to the Group as they are
aligned with the joint operations partners’ reporting date and / or the reporting date is prescribed by local statutory requirements.
2Arrangements have a 31 March reporting date. These entities have different statutory reporting dates to the Group as they are
aligned with the joint operations partners’ reporting date and / or the reporting date is prescribed by local statutory requirements.
48
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
28. NOTES TO THE STATEMENT OF CASH FLOWS
a) Reconciliation of profit for the year to net cash from operating activities
Profit for the year
Adjustments for:
- Depreciation of property, plant and equipment
- Amortisation of intangibles
- Net gain on sale of investments
- Net gain on fair value investments1
- Net gain on sale of assets
-
-
- Net amounts set aside to provisions
- Dividends received from investments
- Ventia
- CCPP settlement payable
-
Foreign exchange loss / (gain)
Interest on lease liabilities2
Share of profits of equity investments
Increase in receivables
Net changes in assets / liabilities:
-
- Decrease in investments, joint ventures and associates
-
-
- Decrease in provisions
- Current and deferred income tax movement
Increase in inventories
Increase / (decrease) in payables
12 months to
December 2023
$m
438.7
12 months to
December 2022
$m
426.2
284.8
15.4
-
(29.4)
(8.7)
3.1
11.9
216.3
(33.6)
-
-
(153.3)
(252.4)
42.6
11.2
(174.7)
(190.0)
(59.8)
298.1
13.4
(30.0)
(10.4)
(3.6)
(1.2)
13.1
177.8
(20.9)
(501.7)
300.0
(169.0)
(716.5)
86.7
(24.2)
494.7
(171.8)
313.5
Net cash from operating activities
1Gains recognised through profit or loss includes Thiess Class C preference shares for the year ended 31 December 2023 of $18.0
million (31 December 2022: $4.9 million). Refer to Note 26: Joint venture entities – Material joint venture.
122.1
474.2
2Interest on finance leases of $11.9 million (December 2022: $13.1 million) is disclosed within repayment of leases in the
consolidated statement of cashflows.
49
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
28. NOTES TO THE STATEMENT OF CASH FLOWS CONTINUED
b) Reconciliation of liabilities arising from financing activities
Interest bearing loans and financial liabilities
December
2022
.
Cash flows
Amortisation
of borrowing
costs
$m
3,345.3
33.7
$m
(255.5)
(34.0)
$m
6.6
-
Foreign
exchange
and other
movements1
$m
(51.4)
0.3
December
2023
$m
3,045.0
-
Interest bearing loans
Financial liability
1During the reporting period, the Group disposed of an interest bearing loan as part of the Group’s divestment of a 49% equity
interest in its wholly owned subsidiary Glenrowan Solar Holdings Pty Limited.
December
2021
.
Cash flows
Amortisation
of borrowing
costs
$m
2,442.1
68.9
$m
863.1
(38.9)
$m
5.8
-
Foreign
exchange
and other
movements
$m
34.3
3.7
December
2022
$m
3,345.3
33.7
December
2022
$m
264.6
.
Cash flows
$m
(98.0)
Addition /
acquisitions
$m
74.0
Interest
charged
$m
11.9
Disposals2
Other
$m
(15.2)
$m
0.1
December
2023
$m
237.4
Interest bearing loans
Financial liability
Lease liabilities
Lease liabilities
2During the reporting period, the Group disposed of lease liabilities as part of the Group’s divestment of a 49% equity interest in its
wholly owned subsidiary Glenrowan Solar Holdings Pty Limited.
Lease liabilities
December
2021
$m
277.2
.
Cash flows
$m
(91.8)
Addition /
acquisitions
$m
65.8
Interest
charged
$m
13.1
Disposals
Other
$m
(0.3)
$m
0.6
December
2022
$m
264.6
50
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
29. ACQUISITIONS AND DISPOSALS
Acquisitions
Skybridge Telecommunications
On 29 November 2023, CIMIC through its wholly owned subsidiary UGL Operations and Maintenance Pty Ltd acquired the
telecommunications services of Skybridge. Skybridge is an Australian installation and maintenance contracting company which
specialises in the fibre, wireless and satellite telecommunications markets. The acquisition included the transfer of certain
customer contracts and Skybridge telecommunications personnel and subcontractor arrangements, as well as equipment,
intellectual property, and engineering capabilities. The purchase consideration was $11.1 million. The acquisition has been
accounted for under AASB 3: Business Combinations.
The contribution by Skybridge Telecommunications to the Group from either the acquisition date or 1 January 2023 to the end of
the period ended 31 December 2023 was immaterial.
Novopro Projects
On 6 July 2023, CIMIC through its wholly owned subsidiary Sedgman Pty Limited acquired 100% of Novopro Projects Inc
(‘Novopro’). Novopro is a Canadian engineering and metallurgy company that provides services to projects in North America,
Europe, Africa and Australia. Their main activity and specialty is project development and operational optimization in mineral
processing for lithium projects, as well as potash, salt, magnesium and soda ash. The purchase consideration was $19.3 million of
which $3.1 million was deferred. The acquisition has been accounted for under AASB 3: Business Combinations.
The contribution by Novopro to the Group from either the acquisition date or 1 January 2023 to the end of the period ended 31
December 2023 was immaterial.
Disposals
Glenrowan Solar Farm
During the period the Group divested a 49% equity interest in its wholly owned subsidiary Glenrowan Solar Holdings Pty Limited
and its controlled entities (“Glenrowan”) and entered into a joint venture arrangement with the acquirer. The sale completed on 22
June 2023.
The terms of the completed sale agreement means that the transaction was accounted for as a disposal of controlled entities in
accordance with AASB 10: Consolidated Financial Statements (“AASB 10”) resulting in the deconsolidation of Glenrowan. The terms
of the shareholders agreement require the consent of both shareholders on relevant business activities and both parties are
exposed to variable returns, resulting in joint control in accordance with AASB 11: Joint Arrangements. Accordingly, the Group has
recognised its retained interest in Glenrowan as a joint venture entity on 22 June 2023.
30. HELD FOR SALE
Asset held for sale as at 31 December 2023 is $nil (31 December 2022: $44.1 million). During the year, the Group’s 15% interest in
Wellington Gateway Partnership No.1 Limited and Wellington Gateway General Partner No.1 Limited was transferred from held for
sale to financial assets as final terms with the purchaser could not ultimately be agreed. On termination of the sale, disposal within
12 months is no longer considered highly probable.
51
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
31. COMMITMENTS
Capital expenditure contracted for at reporting date but not recognised as liabilities is as follows:
December 2023
$m
December 2022
$m
Property, plant and equipment
Payable:
- within one year
-
-
Total
later than one year but not later than five years
later than five years
Share of Joint Ventures’ commitments - property, plant and equipment
Payable:
- within one year
-
-
Total
later than one year but not later than five years
later than five years
Share of Associates’ commitments - property, plant and equipment
Payable:
- within one year
-
-
Total
later than one year but not later than five years
later than five years
107.8
-
-
107.8
14.4
-
-
14.4
0.3
-
-
0.3
85.4
-
-
85.4
22.0
-
-
22.0
1.6
0.1
-
1.7
52
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
32. CONTINGENT LIABILITIES
Bank guarantees, insurance bonds and letters of credit
Indemnities given by third parties on behalf of controlled entities and equity accounted investments are as follows:
Bank guarantees
Insurance, performance and payment bonds
Letters of credit
Other contingencies
December 2023
$m
December 2022
$m
3,858.4
1,769.2
333.4
3,457.6
1,791.7
386.2
i.
ii.
The Company gives, in the ordinary course of business, guarantees and indemnities in respect of the performance by
controlled entities, associates and related parties of their contractual and financial obligations. The value of these guarantees
and indemnities is indeterminable in amount.
There exists in some entities within the Group the normal design liability in relation to completed design and construction
projects.
iii. Certain entities within the Group have the normal contractor’s liability in relation to construction contracts. This liability may
include litigation by or against the Group and / or joint arrangements in which the Group has an interest. It is not possible to
estimate the financial effect of these claims should they be successful.
iv. Controlled entities have entered into joint arrangements under which the controlled entity may be jointly and severally liable
for the liabilities of the joint arrangement.
v. Pursuant to the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, the Company has entered into approved
deeds of cross-guarantee with participating Australian subsidiary companies.
vi. On 13 February 2012, CIMIC announced that it had reported to the Australian Federal Police (“AFP”) a possible breach by the
Leighton International business of its Code of Ethics that, if substantiated, may have contravened Australian laws. The matter,
has been, and in some cases continues to be, subject to the investigations below:
▪
In March 2014, the Australian Securities and Investment Commission ("ASIC") commenced a formal investigation into
potential breaches of the Corporations Act relating to a number of matters being investigated by the AFP. In March 2017,
ASIC advised CIMIC that its investigation has concluded and it will take no further action.
▪ On 22 May 2018, the UK Serious Fraud Office (“SFO”) announced it has charged individuals, none of whom are CIMIC
employees, and on 26 June 2018 announced it has charged a company, which is not a member of the CIMIC Group. On
19 July 2019 the SFO announced that one individual had pleaded guilty to charges. Following trials in 2020 and 2021 the
individuals were convicted on some charges. However, some of those convictions have been overturned on appeal.
None of the juries’ guilty findings relate to charges involving the CIMIC Group company contracts.
▪ On 1 March 2019, CIMIC entered into an investigation agreement with the Department of Justice (“DOJ”). On 30 October
2019 the US DOJ announced that in March 2019 three individuals not employed by CIMIC pleaded guilty to a charge of
conspiracy to violate the Foreign Corrupt Practices Act.
▪ On 18 November 2020 the AFP advised CIMIC that it had charged an ex-employee with alleged offences relating to
foreign bribery and related matters and on 23 February 2021 the AFP announced it had brought an additional charge in
relation to foreign bribery. On 11 January 2021 the AFP informed CIMIC that it had charged a second ex-employee with
related offences. The AFP has also indicated it may charge a further ex-employee and that its investigations continue.
CIMIC does not know when the charges will be heard or the outcome of any investigation.
No CIMIC Group company has been charged.
CIMIC continues to cooperate with all official investigations.
53
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
32. CONTINGENT LIABILITIES CONTINUED
Other contingencies continued
vii. On 25 August 2020 the Company announced to the ASX that a group of shareholders initiated proceedings on 24 August 2020
relating to the period 7 February 2018 – 22 January 2020 with regards to disclosures about the Company’s non-controlling
45% investment in the Middle East as well as the reporting of the Company’s cash flows in the context of factoring
arrangements. The Company denies there is a proper basis for the claim and is defending the proceedings.
viii. CIMIC's wholly owned subsidiary, CPB Contractors, and its joint venture partner Hansen Yuncken, in a 50/50 JV, were awarded
the design and construction of the new Royal Adelaide Hospital for the South Australian State Government. The project
experienced difficulties and delays arising from the complex interdependencies between the State’s works and the JV’s works
and a dispute between the parties arose. An arbitration to settle the dispute between the parties was commenced but has
been delayed with hearings due to commence in February 2024 with a decision made thereafter.
33. CAPITAL RISK MANAGEMENT
Capital planning forms part of the business and strategic plans of the Group. Decisions relating to obtaining and investing capital
are made following consideration of the Group’s key financial objectives including the maintenance of an investment grade credit
rating. Performance measures include return on revenue, return on equity, earnings growth, liquidity and borrowing capacity.
The Group has access to numerous sources of capital both domestically and internationally, including cash balances, equity, bank
debt, capital markets, insurance, lease facilities and trade finance facilities.
54
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS
a) Classification of financial assets and financial liabilities
Financial assets
Financial assets at amortised cost:
Cash and cash equivalents
Trade and other receivables1
Financial assets at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Derivative financial instruments:
Used for hedging
Held for trading at fair value through profit or loss
Balance at reporting date
1Excludes prepayments of $216.2 million (31 December 2022: $103.5 million).
Financial liabilities
Financial liabilities at amortised cost:
Trade and other payables
Financial liability
Interest bearing liabilities
Lease liabilities
Derivative financial instruments:
Used for hedging
Held for trading at fair value through profit or loss
Balance at reporting date
December 2023
$m
December 2022
$m
2,498.9
1,131.2
291.0
5.9
23.1
5.4
3,955.5
2,569.0
1,225.6
215.8
677.0
4.2
-
4,691.6
December 2023
$m
December 2022
$m
5,172.1
5,392.2
-
3,045.0
237.4
12.7
1.6
33.7
3,345.3
264.6
21.5
6.1
8,468.8
9,063.4
The Group’s exposure to various risks associated with the financial instruments is discussed in Note 34(b): Financial risk
management – Credit risk. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each
class of financial asset mentioned above.
Where carrying amounts differ from fair value, these amounts are shown in Note 34(c): Financial instruments – Fair value
hierarchy. All other assets and liabilities in the Group’s consolidated statement of financial position approximate fair values.
55
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
a) Classification of financial assets and financial liabilities continued
The Group’s financial instruments resulted in the following income, expenses and gains and losses recognised in the consolidated
statement of profit or loss:
Income, expenses and gains and losses recognised in the statement of profit or loss:
Interest from assets held at amortised cost
Net fair value gain on equity investments mandatorily measured at FVPL1
Loss on de-recognition of financial assets
Net foreign exchange (losses) / gain recognised in profit before income tax for the period
12 months to
December 2023
$m
12 months to
December 2022
$m
78.2
29.4
(11.7)
(3.1)
35.2
0.2
(6.3)
1.2
1Gains recognised through profit or loss includes Thiess Class C preference shares for the year ended 31 December 2023 of $18.0
million (31 December 2022: $4.9 million). Refer to Note 26: Joint venture entities – Material joint venture.
b) Financial risk management
The activities of the Group result in exposure to credit, liquidity and market risk (equity price, foreign currency and interest rate).
To minimise any adverse effects on the financial performance of the Group, derivative financial instruments, such as foreign
exchange forward contracts, are used to hedge certain foreign currency risk exposures. These instruments reduce the uncertainty
of foreign currency transactions.
Financial risk management is controlled by a central treasury department based on financial policies approved by the Board. The
central treasury department identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units.
The written principles for overall risk management cover specific areas, such as foreign exchange risk, interest rate risk, credit risk,
use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
Hedge accounting is applied to remove the accounting mismatch between the hedging instrument and the hedged item. The
effective portion of the change in the fair value of the hedging instrument is deferred into the cash flow hedge reserve through OCI
and will be recognised in profit or loss when the hedged item affects profit or loss. This will effectively result in recognising non-
financial assets at the fixed foreign currency rate for the hedged purchases.
Derivatives used for hedging
The Group has the following derivative financial instruments used for hedging:
Current and non-current assets
Forward foreign exchange contracts – cash flow hedges
Cross currency interest rate swap - cash flow hedges
Current and non-current liabilities
Forward foreign exchange contracts – cash flow hedges
Cross currency interest rate swap - cash flow hedges
12 months to
December 2023
$m
12 months to
December 2022
$m
0.9
22.2
12.7
-
4.2
-
0.4
21.1
The Group’s accounting policy for its cash flow hedges is set out in Note 1(e): Derivative financial instruments. For hedged forecast
transactions that result in the recognition of a non-financial asset, the related hedging gains and losses are included in the initial
measurement of the cost of the asset.
56
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
i)
Credit risk
Credit risk represents the risk that a counterparty will not complete its obligations under a financial instrument resulting in a
financial loss to the Group. The Group has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. The
Group minimises concentrations of credit risk by undertaking transactions with a large number of customers in various countries.
Derivative and deposit counterparties are limited to investment grade financial institutions.
The ageing of the Group’s receivables at the reporting date was: $360.8 million not due (31 December 2022: $308.5 million);
$118.5 million past due (31 December 2022: $100.8 million). Past due is defined under AASB 9: Financial Instruments to mean any
amount outstanding for one or more days after the contractual due date. Past due receivables aged greater than 60 days: $68.7
million or 2.3% (31 December 2022: $67.2 million or 2.5%).
Impairment of financial assets
In relation to the impairment of financial assets, AASB 9 requires an expected credit loss model. The expected credit loss model
requires the Group to account for expected credit losses at each reporting date to reflect changes in credit risk since initial
recognition of the financial assets. In other words, it is no longer necessary for a credit event to have occurred before credit losses
are recognised.
In particular, AASB 9 requires the Group to measure the loss allowance for a financial instrument at an amount equal to the
lifetime expected credit losses (ECL) if the credit risk of that financial instrument has increased significantly since initial recognition,
or if the financial instrument is a purchased or originated credit-impaired financial asset. However, if the credit risk on a financial
instrument has not increased significantly since initial recognition (except for a purchased or originated credit-impaired financial
asset), the Group is required to measure the loss allowance for that financial instrument at an amount equal to 12-months ECL.
AASB 9 also requires a simplified approach for measuring the loss allowance at an amount equal to lifetime ECL for trade
receivables, contract assets and lease receivables in certain circumstances. The Group has applied this simplified approach,
applying the accounting policy set out in Note 1(d)(iii): Non-derivative financial instruments – impairment.
The Group recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at
amortised cost, lease receivables, amounts due from customers, as well as on loan commitments and financial guarantee contracts.
No impairment loss is recognised for investments in equity instruments. The amount of expected credit losses is updated at each
reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
Low credit risk financial instruments
Some financial instruments are considered low credit risk due to contracts held with certain counterparties, including government
organisations with strong capacity to meet contractual cash flow obligations in the near term and not expected to be affected by
changes in economic and business conditions.
57
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
i)
Credit risk continued
Measuring movements in credit risk
A summary of the categories used to measure credit risk are as follows:
Category
Company definition of category
Performing
Customers have a low risk of default, no past due
amounts.
Underperforming Amount is initially past due (unless there is reasonable
and supportable information to prove otherwise) or
there has been a significant increase in credit risk since
initial recognition.
Non-performing
Amount is significantly past due (unless there is
reasonable and supportable information to prove
otherwise) and there is evidence indicating the asset is
credit impaired.
Basis for recognition of expected credit loss
provision
12 month expected losses or
Lifetime expected losses (simplified
approach) where asset life is less than 12
months
Lifetime expected losses – not credit
impaired
Lifetime expected losses – credit impaired
Write-off
There is evidence indicating that the debtor is in severe
financial difficulty and the Group has no realistic
prospect of recovery.
Asset is written off
The Company considers the probability of default upon initial recognition of the asset and whether there has been a significant
increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in
credit risk, the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at
the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is
reasonable and supportable, including historical experience and forward-looking information that is available without undue cost
or effort. Forward-looking information considered includes the future prospects of the industries in which the Group’s debtors
operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar
organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the
Group’s core operations. In particular, the following information is taken into account when assessing significant movements in
credit risk:
▪
▪
▪
▪
▪
▪
▪
internal credit rating;
external credit rating (as far as available);
actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a
significant change to the borrower’s ability to meet its obligations;
actual or expected significant changes in the operating results of the borrower;
significant increases in credit risk on other financial instruments of the same borrower;
significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit
enhancements;
significant changes in the expected performance and behaviour of the borrower, including changes in the payment status of
borrowers in the Group and changes in the operating results of the borrower; and
▪ macroeconomic information such as market interest rates and growth rates.
58
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
b)
Financial risk management continued
i)
Credit risk continued
Definition of default
The Group considers the following as constituting an event of default for internal credit risk management purposes as historical
experience indicates that receivables that meet either of the following criteria are generally not recoverable:
▪
if there is a material breach of financial covenants by the counterparty and this is not expected to be remedied in the
foreseeable future; or
information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors,
including the Group, in full (without taking into account any collaterals held by the Group). Irrespective of the above analysis,
the Group considers that default has occurred when a financial asset is significantly past due unless the Group has reasonable
and supportable information to demonstrate that a more lagging default criterion is more appropriate.
▪
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of
that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following
events:
▪
▪
▪
significant financial difficulty of the issuer or the borrower;
a breach of contract, such as a default or past due event;
the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having
granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
the disappearance of an active market for that financial asset because of financial difficulties.
▪
▪
Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and
there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or entered into bankruptcy
proceedings. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures,
taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
Credit risk exposure
The information below details the credit quality of the Group’s financial assets and other items, as well as the Group’s maximum
exposure to credit risk by categories.
Contract debtors, trade and other receivables
The Group applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits the use of
the lifetime expected loss provision for all trade receivables. There were no significant concentrations of credit risk in the current
or prior year. The Group’s maximum exposure to credit risk for receivables at the reporting date was $3,230.2 million (31
December 2022: $3,112.9 million). The split by geography was: Australia Pacific $1,775.3 million (31 December 2022: $1,728.1
million) and Asia, Americas & Other Overseas $1,454.9 million (31 December 2022: $1,384.8 million).
Contract debtors, trade and other receivables are rated performing, assessed under the lifetime ECL simplified method and have a
net carrying amount of $3,039.1 million (31 December 2022: $2,787.7 million). The loss allowance recognised is $nil (31 December
2022: $nil). Related party receivables and loans to joint ventures and associates are rated performing, assessed under the 12
month ECL and have a carrying amount of $191.1 million (31 December 2022: $325.2 million). The loss allowance recognised is $nil
(31 December 2022: $nil).
59
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
ii)
Liquidity risk
Liquidity risk is the risk of having insufficient funds to settle financial liabilities when they fall due. This includes having insufficient
levels of committed credit facilities. The Group’s objective is to maintain efficient use of cash and debt facilities in order to balance
the cost of borrowing and ensuring sufficient availability of credit facilities to meet forecast capital requirements. The Group
adopts a prudent approach to cash management which ensures sufficient levels of cash and committed credit facilities are
maintained to meet working capital requirements. Liquidity is reviewed continually by the Group’s treasury departments through
daily cash monitoring, review of available credit facilities and forecasting and matching of cash flows.
Contractual maturities are outlined below, however, we are not currently aware of any circumstances where the outflows could be
significantly different or occur earlier than indicated.
Contractual maturities of financial liabilities and cash flow hedge contracts as at 31 December 2023 are as follows:
31 December 2023
Non-derivative financial liabilities
Interest bearing loans
Lease liabilities
Carrying
amount
$m
Contractual
cash flows
$m
Less than
1 year
$m
1-5 years
More than
5 years
$m
$m
3,045.0
(3,202.9)
237.4
(256.9)
(60.4)
(91.5)
(2,119.3)
(1,023.2)
(156.9)
(8.5)
Total interest bearing liabilities
3,282.4
(3,459.8)
(151.9)
(2,276.2)
(1,031.7)
Trade and other payables
5,172.1
(5,172.1)
(4,997.6)
(174.5)
Derivative financial liabilities / (assets)
Forward exchange contracts used for foreign
currency hedging:
Net derivative financial liabilities / (assets)1
11.8
Inflow
Outflow
203.9
(215.7)
150.7
(158.0)
53.2
(57.7)
Cross currency interest rate swap:
Net derivative financial liabilities / (assets)
(22.2)
-
-
-
Inflow
Outflow
1,098.7
(1,173.6)
Total net derivative financial liabilities / (assets)
(10.4)
(86.7)
15.1
(34.6)
(26.8)
60.4
1,023.2
(138.4)
(1,000.6)
(82.5)
22.6
1Net derivative financial liabilities / (assets) relating to foreign currency hedging includes $0.9 million of derivatives in an asset
position and $12.7 million of derivatives in a liability position.
60
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
ii)
Liquidity risk continued
Contractual maturities of financial liabilities and cash flow hedge contracts as at 31 December 2022:
31 December 2022
Non-derivative financial liabilities
Interest bearing loans
Lease liabilities
Carrying
amount
$m
Contractual
cash flows
$m
Less than
1 year
$m
1-5 years
More than
5 years
$m
$m
3,345.3
(3,607.1)
(159.0)
(2,413.1)
(1,035.0)
264.6
(302.5)
(85.1)
(177.8)
(39.6)
Total interest bearing liabilities
3,609.9
(3,909.6)
(244.1)
(2,590.9)
(1,074.6)
Financial liability
33.7
(33.7)
(33.7)
-
Trade and other payables
5,392.2
(5,392.2)
(5,203.2)
(189.0)
Derivative financial liabilities / (assets)
Forward exchange contracts used for foreign
currency hedging:
Net derivative financial liabilities / (assets)1
(3.8)
Inflow
Outflow
465.2
(461.4)
459.8
(456.1)
5.4
(5.3)
Cross currency interest rate swap:
Net derivative financial liabilities / (assets)
21.1
-
-
-
-
Inflow
Outflow
1,086.5
(1,208.2)
Total net derivative financial liabilities / (assets)
17.3
(117.9)
14.7
(34.6)
(16.2)
59.0
1,012.8
(138.4)
(1,035.2)
(79.3)
(22.4)
1Net derivative financial liabilities / (assets) relating to foreign currency hedging includes $4.2 million of derivatives in an asset
position and $0.4 million of derivatives in a liability position.
61
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
ii)
Liquidity risk continued
Trade finance arrangements
The Group enters into factoring agreements with banks and financial institutions. These agreements only relate to certified
receivables, on a non-recourse basis, acknowledged by the client with payment only being subject to the passage of time. Under
the factoring agreements:
▪
▪
▪
the certified receivables are de-recognised where the risks and rewards of the receivables have been transferred, as the cash
flow is only derived when there are goods or services provided or work performed by the Group for which it is entitled to be
paid;
the cash flow to the Group only arises when there is an amount certified by the client and contractually due to be paid to the
Group; there are no disputes on the amounts due and the customer has acknowledged this by way of certification; and
the receipt by the Group irrevocably removes the Group’s right to the certified receivable due from the customers.
The factoring of these receivables is therefore done on a non-recourse basis. The level of non-recourse factoring across the Group
was $481.9 million as at 31 December 2023 (31 December 2022: $528.4 million).
The Group does not consider there to be a concentration of credit risk from a financial institution.
iii)
Equity price risk
Equity price risk is the risk that the fair value of either a listed or unlisted equity investment, derivative equity instrument, or a
portfolio of such financial instruments decreases in the future. The Group invests in equity investments through its participation in
major PPP infrastructure projects. Investments may also be made as part of its strategic plans to form alliances or to invest in
specialised but complementary businesses to access specialised skills, markets, or additional capacity.
Fair values
For the fair values of listed and unlisted investments and derivative equity instruments, see section (c) of this note.
Sensitivity analysis of listed and unlisted investments
The price risk for the listed and unlisted securities is immaterial in terms of the possible impact on profit or loss or total equity.
iv)
Foreign currency risk
Foreign currency risk is the risk that the value of a financial commitment, a recognised asset or liability will fluctuate due to
changes in foreign currency rates. The Group’s foreign currency risk arises primarily from net investments in foreign operations.
The Group uses non-derivative financial instruments, such as borrowings in the foreign currencies, to hedge its investments in
foreign operations. Foreign currency gains and losses arising from translation of net investments in foreign operations are
recognised in the foreign currency translation reserve until realised.
Shareholders of the Group are exposed to foreign currency risk on project receipts and expenditure on plant and equipment
denominated in currencies other than their functional currency. Where this foreign currency risk is considered to be significant,
shareholders of the Group enter into forward exchange contracts to hedge their foreign currency risk. These hedges are classified
as cash flow hedges and measured at fair value.
62
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
iv)
Foreign currency risk continued
Cash flow hedges
Forward exchange contracts
The Group’s forward exchange contracts protect against foreign exchange rate fluctuations on highly probable forecast
transactions. As at reporting date the fair value of these outstanding designated derivatives recognised in equity is $11.8 million (31
December 2022: $3.8 million). It is expected that the current hedged forecast transactions will occur during the periods outlined in
section (b(ii)) above and will affect the statement of profit or loss in the same periods. There are no gains or losses recognised in
the statement of profit or loss during the period due to hedge ineffectiveness.
Cross currency interest rate swap
On 20 May 2021 and 2 June 2021, CIMIC Finance Pty Limited issued a total of EUR625.0 million of 8-Year Fixed-Rate corporate
bonds in the Euro Medium Term Note market.
The notes bear interest from 28 May 2021 at the rate of 1.5% per annum and mature on 28 May 2029. Interest on the notes is
paid annually on the 28th day of May in each year. Carrying amount at 31 December 2023: EUR625.0 million, equivalent to
$1,008.1 million (31 December 2022: EUR625.0 million, equivalent to $976.6 million). The average Australian dollar to Euro
exchange rate is 0.61. There are $6.2 million of capitalised borrowing and other costs recognised against the loan facility (31
December 2022: $7.2 million).
In order to hedge the exposure to movements in foreign exchange between the Australian Dollar and the Euro, the Group
entered into a Cross Currency Interest Rate Swap (“CCIRS”). The terms match the term and value of the underlying debt and
CIMIC has designated and documented this as a hedge relationship and swap the fixed rate Euro debt into fixed rate Australian
Dollar Debt with an interest rate of 3.5%.
The notional principal of the CCIRS receive leg is EUR625.0 million at a rate of 1.5% and of the pay leg is AUD $983.3 million at a
rate of 3.5%. The Group applies the maturity date approach to classify derivative financial instruments.
The hedging reserve represents hedging gains and losses recognised on the effective portion of cash flow hedges. The cumulative
deferred gain or loss on the hedge is recognised in profit or loss consistent with the timing of recognition of the hedged item
through profit or loss.
63
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
iv)
Foreign currency risk continued
Cross currency interest rate swap
Derivative financial assets / (liabilities)
Assets
Liabilities
Balance at reporting date
As at reporting date
Cumulative fair value adjustment on hedged item
Effective portion recognised in reserves
Changes during the reporting period
Change in fair value of the hedging instrument
Change in fair value of the hedged item
Cash flow hedge reserve (cumulative)
Cumulative fair value adjustment on hedged item
Gain / (loss) on hedge ineffectiveness recognised in profit and loss
Amount reclassified from cash flow hedge reserve to profit and loss
Effective portion recognised in cash flow hedge reserve from change in fair value of
hedging instrument after FX movement
Tax impact
Cash flow hedge reserve balance
12 months to
December 2023
$m
12 months to
December 2022
$m
22.2
-
22.2
(22.2)
(22.0)
43.3
(43.1)
(22.2)
(0.2)
24.7
2.3
(0.7)
1.6
-
(21.1)
(21.1)
21.1
21.1
(34.3)
(34.3)
21.1
-
(6.7)
14.4
(4.3)
10.1
64
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
iv)
Foreign currency risk continued
Forward exchange contracts
Derivative financial liabilities
Assets
Liabilities
Balance at reporting date
AAs at reporting date
Cumulative fair value adjustment on hedged item
Effective portion recognised in reserves
Changes during the reporting period
Change in fair value of the hedging instrument
Change in fair value of the hedged item
Effective portion recognised in cash flow hedge reserve from change in fair value of
hedging instrument after foreign exchange movement
Amount reclassified from cash flow hedge reserve to profit and loss
12 months to
December 2023
$m
12 months to
December 2022
$m
0.9
(12.7)
(11.8)
-
(11.8)
(15.6)
15.6
15.6
9.5
4.2
(0.4)
3.8
-
3.8
3.9
(3.9)
(3.9)
2.3
65
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
v)
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or cash flow associated with the instrument will fluctuate due to
changes in the market interest rates. The Group uses derivative financial instruments to assist in managing its interest rate
exposure. Speculative trading is not undertaken. The Group’s interest rate risk arises from the interest receivable on ’Cash and
cash equivalents’, interest payable on ‘Interest bearing loans’ and interest payable on ‘Lease liabilities’.
Profile
At the reporting date the interest rate profile of the Group’s interest bearing financial instruments was:
Fixed rate instruments
Financial liabilities
Lease liabilities
Total fixed rate instruments
Variable rate instruments
Financial assets
Financial liabilities
Lease liabilities
Total variable rate instruments
The weighted average interest rates paid during the year were as follows:
Financial assets
Interest bearing financial instruments
December 2023
$m
December 2022
$m
(1,001.9)
(969.5)
-
-
(1,001.9)
(969.5)
2,498.9
2,569.0
(2,043.1)
(2,375.8)
(237.4)
218.4
(264.6)
(71.4)
12 months to
December 2023
%
12 months to
December 2022
%
3.4
4.9
2.7
3.4
66
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
vi)
Sensitivity analysis
Foreign currency
The most significant foreign currencies the Group is exposed to is the United States dollar (US$) along with the Hong Kong dollar
(HKD), which is pegged to the US$. The applicable Australian dollar to US$ exchange rates during or at the end of the relevant
reporting period, were as follows - assets and liabilities: December 2023 0.68 (December 2022: 0.68), statement of profit or loss:
12 months to December 2023 0.66 (12 months to December 2022: 0.69).
At 31 December 2023, the share of the Group’s assets and liabilities denominated in US$ was: assets US$1,673.4 million (31
December 2022: US$1,586.6 million); liabilities US$656.6 million (31 December 2022: US$399.4 million). The majority of these US$
balances are held in entities with a US$ functional currency.
A movement in the US$ against the Australian dollar at reporting date would have increased / (decreased) equity and profit or loss
by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The
analysis was performed on the same basis for the period ended 31 December 2022.
Equity
Statement of Profit or Loss
December 2023
$m
December 2022
$m
12 months to
December 2023
$m
12 months to
December 2022
$m
US$ depreciates by 5% against AU$ (AU$ appreciates)
US$ appreciates by 5% against AU$ (AU$ depreciates)
(74.8)
74.8
(86.0)
86.0
(1.5)
1.5
(1.3)
1.1
Interest rate
At the reporting date it is estimated that an increase of 100bps in floating interest rates would have increased the Group’s profit
after tax and retained earnings by $1.1 million (31 December 2022: increased by $0.2 million). A 100bps decrease in interest rates
would have an equal and opposite effect.
As a result of the CCIRS entered into during the year, at the reporting date it is estimated than an increase of 100bps in floating
interest rate would have increased the Group's other comprehensive income after tax and reserves by $37.9 million (31 December
2022: increased by $44.7 million). There would be no impact to the Group's profit after tax. A 100bps decrease in the floating
interest rate would have an equal and opposite effect.
c) Net fair values of financial assets and liabilities
Fair value hierarchy
AASB 13: Fair Value Measurement requires disclosure of fair value measurements by level of the fair value hierarchy. The fair
values of financial assets and liabilities held at fair value have been determined based on either the listed price or the net present
value of cash flows using current market rates of interest.
The table below analyses other financial instruments carried at fair value, listed in order of valuation method. The different levels
have been identified as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
inputs for the asset or liability that are not based on observable market data.
Level 3:
67
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
c) Net fair values of financial assets and liabilities continued
Fair value hierarchy continued
31 December 2023
Assets
Financial assets at fair value through profit or loss
- Unlisted
Financial assets at fair value through other comprehensive income
-
Listed
Derivatives
-
-
-
Forward foreign exchange contracts - cash flow hedges
Cross currency interest rate swap contracts - cash flow hedges
FX swaps – held for trading
- Total assets
Liabilities
- Financial liabilities at fair value through profit of loss
- Class C Shares Option
- 0
BDerivatives
-
-
Forward foreign exchange contracts - cash flow hedges
Cross currency interest rate swap contracts - cash flow hedges
- Total liabilities
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
-
5.9
-
-
-
5.9
-
-
-
-
-
-
0.9
22.2
5.4
28.5
291.0
291.0
-
-
-
-
5.9
0.9
22.2
5.4
291.0
325.4
-
(1.6)
(1.6)
(12.7)
-
(12.7)
-
-
(12.7)
-
(1.6)
(14.3)
68
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
c) Net fair values of financial assets and liabilities continued
Fair value hierarchy continued
31 December 2022
Assets
Financial assets at fair value through profit or loss
-
Listed
- Unlisted
Financial assets at fair value through other comprehensive income
-
Listed
Derivatives
-
-
Forward foreign exchange contracts - cash flow hedges
Cross currency interest rate swap contracts - cash flow hedges
- Total assets
Liabilities
- Financial liability at fair value through profit of loss
- Put option
- Class C Shares Option
- 0
BDerivatives
-
-
Forward foreign exchange contracts - cash flow hedges
Cross currency interest rate swap contracts - cash flow hedges
- Total liabilities
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
-
-
677.0
-
-
677.0
-
-
-
-
-
-
-
-
4.2
-
4.2
-
-
(0.4)
(21.1)
(21.5)
-
-
215.8
215.8
-
-
-
677.0
4.2
-
215.8
897.0
(4.4)
(1.7)
-
-
(6.1)
(4.4)
(1.7)
(0.4)
(21.1)
(27.6)
69
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
c) Net fair values of financial assets and liabilities continued
Fair value hierarchy continued
During the period there were no transfers between Level 1, Level 2 and Level 3 fair value hierarchies. Level 3 instruments comprise
unlisted equity and stapled securities and unlisted financial assets at fair value through profit and loss; the determination of the
fair value of these securities is discussed below. The tables below analyse the changes in Level 3 instruments as follows:
Financial assets at fair value through profit or loss
Balance at beginning of reporting period
Additions
Disposals
Transfers1
Gains recognised through profit or loss2
Foreign exchange recognised in other comprehensive income
Balance at reporting date
12 months to
December 2023
$m
12 months to
December 2022
$m
215.8
2.1
-
43.6
29.4
0.1
80.4
191.3
-
(56.6)
0.7
-
291.0
215.8
1During the year, the Group’s 15% interest in Wellington Gateway Partnership No.1 Limited and Wellington Gateway General
Partner No.1 Limited was transferred from held for sale to financial assets as final terms with the purchaser could not ultimately be
agreed. On termination of the sale, disposal within 12 months is no longer considered highly probable.
2Gains recognised through profit or loss includes Thiess Class C preference shares for the year ended 31 December 2023 of $18.0
million (31 December 2022: $4.9 million). Refer to Note 26: Joint venture entities – Material joint venture.
Changing inputs to the Level 3 valuations to reasonably possible alternative assumptions would not change significantly amounts
recognised in profit or loss, total assets, total liabilities or total equity.
Methods and valuation techniques
The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous
reporting period.
Listed and unlisted investments
The fair values of listed investments are determined on an active market valuation basis using observable market data such as
current bid prices. The fair values of unlisted investments are determined by the use of internal valuation techniques using
discounted cash flows. Where practical the valuations incorporate observable market data. Assumptions are generally required
with regard to future expected revenues and discount rates.
Listed and unlisted debt
Fair value has been determined based on either the listed price or the net present value of cash flows using current market rates of
interest.
70
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
c) Net fair values of financial assets and liabilities continued
Methods and valuation techniques continued
The fair value of interest bearing liabilities is:
▪
Euro Medium Term Notes - fair value EUR539.4 million, equivalent to $870.0 million; carrying value EUR625.0 million,
equivalent to $1,008.1 million (fair value 31 December 2022: EUR464.3 million, equivalent to $725.4 million; carrying value
EUR625.0 million, equivalent to $976.6 million).
The carrying amounts of other financial assets and liabilities in the Group’s statement of financial position approximate fair
values.
Cash flow hedges
The Group’s foreign currency forward contracts are not traded in active markets. The fair values of these contracts are estimated
using a valuation technique that maximises the use of observable market inputs, e.g. market exchange and interest rates are
included in Level 2 of the fair value hierarchy. Cross currency interest rate swaps are measured at the present value of future cash
flows estimated and discounted based on the applicable yield curves derived from quoted interest rates that reflect the credit risk
of various counterparties.
Put Option
As part of the Thiess divestment, the transaction agreement includes an option for Elliott to sell all or part of its 50% interest in
Class A preference shares or ordinary shares in Thiess to CIMIC after the third anniversary, between four and six years from
completion on 31 December 2020. The exercise price will be the lower of a cost price or a price referable to movements in the S&P
/ ASX 200 Total Return index plus the accrued value of any shortfall in agreed minimum distributions. This option has no current
impact on the control of the company.
The Put Option is accounted for as a derivative financial instrument in accordance with AASB 9 and is therefore held at fair value
through profit and loss in the financial statements of CIMIC. External independent valuation advisors have been utilised in
determining the fair value of the Put Option.
The fair value of the Put Option cannot be observed from a market price. A Probability Weighted Expected Returns Methodology is
used to derive the value of the Put Option proceeds based on future potential payoffs if the option is exercised, adjusted for the
minimum annual distributions per the Shareholders Agreement, and compares this to the estimated strike price to determine a fair
value. As at 31 December 2023 the fair value of the Put Option was determined to be a liability of $nil (31 December 2022: $4.4
million).
Class C Shares Option
As part of the Group’s investment in the Thiess Class C preference shares, the parties entered into an option deed which includes
an option for Elliott to put their Class C preference shares to CIMIC for a period of 42 months, starting six months after the end of
the Put Option period, or, six months after the date when Elliott cease to own Class A preference shares or ordinary shares or
notices the exercise of options related to all remaining Class A preference shares or ordinary shares.
CIMIC holds a call option to acquire the Class C preference shares from Elliott, for a period of 42 months, starting at the end of the
Put Option period or the date when Elliott ceases to own any Class A preference shares or ordinary shares.
The option is accounted for as a derivative financial instrument in accordance with AASB 9 and is therefore held at fair value
through profit and loss in the financial statements of CIMIC. External independent valuation advisors have been utilised in
determining the fair value of the option.
The fair value of the option cannot be observed from a market price. The option is valued using net present value methodology
having regard to the probabilised outcomes of both the put and the call option. As at 31 December 2023 the fair value of the Class
C Shares Option was determined to be a liability of $1.6 million (31 December 2022: $1.7 million).
71
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
c) Net fair values of financial assets and liabilities continued
Valuation process
The internal valuation process for unlisted investments, unlisted debt and cash flow hedges is managed by a team in the Group
finance department which performs the valuations required for financial reporting purposes. The valuation team reports to the
CIMIC CFO. Discussions on valuation processes and outcomes are held between the valuation team and CFO as required. The
methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous
reporting period.
Valuation inputs
The following table summarises the quantitative information about the significant unobservable inputs used in Level 3 fair value
measurements. There were no significant inter-relationships between unobservable inputs that materially affect fair values.
Financial asset / liabilities
Significant unobservable inputs
Range of inputs
Relationship of inputs to fair value
Unlisted investments
Internal rate of return
Growth rates
Put option
Class C Shares option
Discount rates
Expected exercise period
EBITDA multiple
Discount rates
Expected exercise period
Discount rates
2.5% - 3.0%
9%
8% - 15%
0 – 3 years
3 – 5 times
10% - 15%
3 – 7 years
10% - 15%
The impact on a change in the
unobservable inputs would not
change significantly amounts
recognised in profit or loss, total
assets or total liabilities or total
equity.
72
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
d)
Interest bearing loans
Syndicated loans
CIMIC Finance Limited and CIMIC Finance (USA) Pty Limited, wholly owned subsidiaries of the Company, have five core
syndicated bank debt facilities. The maturity of the facilities are as follows:
▪
▪
▪
▪
▪
$475.0 million maturing on 9 December 2025
$625.0 million maturing on 4 October 2026
$475.0 million maturing on 9 December 2027
$521.6 million maturing on 4 October 2028
$1,043.9 million maturing on 4 October 2028
On 30 June 2023, CIMIC Finance Limited, a wholly owned subsidiary of the Company, refinanced its $1,200.0 million facility that
had been due to mature on 3 May 2024. The refinanced facility of $1,000.0 million matures on 1 July 2025. On 18 October 2023,
the facility was repaid and cancelled.
On 16 October 2023, CIMIC Finance Limited, a wholly owned subsidiary of the Company, refinanced its $950.0 million facility that
had been due to mature on 25 September 2024. There are three new facilities, $625.0 million maturing on 4 October 2026; $521.6
million maturing on 4 October 2028; and a $1,043.9 million term debt facility, that also includes CIMIC Finance (USA) Pty Limited as
a borrower, maturing on 4 October 2028.
The total carrying amount at 31 December 2023 was $1,833.9 million (carrying amount at 31 December 2022: $2,150.0 million).
There are $15.8 million of capitalised borrowing costs recognised against the loan facilities (31 December 2022: $9.2 million). No
amounts drawn under the syndicated loans are classified as current.
At 31 December 2023, the Group had undrawn bank facilities of $1,396.6 million (31 December 2022: $1,105.0 million), and
undrawn guarantee facilities of $477.8 million (31 December 2022: $451.7 million).
Euro Medium Term Notes
On 20 May 2021 and 2 June 2021, CIMIC Finance Pty Limited issued a total of EUR625.0 million of 8-Year Fixed-Rate corporate
bonds in the Euro Medium Term Note market.
The notes bear interest from 28 May 2021 at the rate of 1.50% per annum and mature on 28 May 2029. Interest on the notes is
paid annually on the 28th day of May in each year. Carrying amount at 31 December 2023: EUR625.0 million, equivalent to
$1,008.1 million (31 December 2022: EUR625.0 million, equivalent to $976.6 million). There are $6.2 million of capitalised
borrowing costs recognised against the notes (31 December 2022: $7.2 million).
Bilateral loans
At 31 December 2023, bilateral and other unsecured loan facilities outstanding were $225.0 million (31 December 2022: $235.1
million).
e) Assets pledged as security
The total carrying value of financial assets pledged as security as at 31 December 2023: $nil (31 December 2022: $nil).
73
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
34. FINANCIAL INSTRUMENTS CONTINUED
f) Offsetting of financial assets and liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right
to offset the recognised amounts and there is an intention to settle on a net basis or realise the assets and settle the liability
simultaneously. The gross and net positions of financial assets and liabilities that have been offset in the balance sheet are
disclosed in the table below.
Effects of offsetting on the balance sheet
Related amounts not offset
December 2023
Cash1
December 2022
Cash1
Gross amounts of
bank accounts with a
debit balance
(financial asset)
$m
Gross amounts of
bank accounts with
a credit balance
(financial liability)
$m
646.4
(48.5)
$m
597.9
Net cash amount
Amounts subject to
master netting
arrangements
Net amount
$m
$m
-
-
-
-
169.0
(22.6)
146.4
1The Group has transactional banking facilities that notionally pool grouped bank accounts with credit and debit balances.
74
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
35. EMPLOYEE BENEFITS
a) Defined contribution superannuation funds
During the period, the Group recognised $214.4 million (31 December 2022: $177.5 million) of defined contribution expenses.
b)
Long-Term Incentive Plan
The Group’s ultimate controlling parent entity, Actividades de Construcción y Servicios, SA (ACS), established a Long-Term
Incentive Plan for the period 2023 to 2028 (the Plan). ACS granted stock options to CIMIC Executive Board members and certain
executives in the CIMIC Group in 2023. The Plan will be settled by ACS using its own equity, and with no obligation by CIMIC to
fund the scheme. As such the Plan is considered to be equity settled in accordance with AASB 2: Share-based Payment. CIMIC
recognises an employee expense and a corresponding deemed capital contribution from ACS.
The following terms and conditions apply:
(a) The maximum number of granted options is 1,040,000.
(b) The beneficiaries are 34 executives with options from 15,000 to 200,000, including the Executive Chairman, Chief Executive
Officer, Deputy Chief Executive Officer and Chief Financial Officer.
(c) The strike price will be EUR 31.55, equivalent to AUD $50.89 per share. The fair value of the scheme is estimated at EUR 2.20
(AUD $3.60) per share.
(d) The options were granted to the executives on 1 July 2023 and, subject to achieving the Plan and Service conditions, will
expire on 30 June 2028.
(e) Vesting conditions require that, in addition to the service conditions required until the exercise date, the operational, financial
and sustainability-related performance of the ACS Group during the relevant must be compliant with the ACS Group’s
objectives. The criteria chosen for meeting these objectives are:
• With a weighting of 40%, the Total Shareholder Return (TSR) in the period (2023-2025) must be higher than the
median of main companies in the sector with comparable stock market capitalization and international status to
ACS. In this case, the executive receives 100% of the awards assigned in this section. If the TSR in this period is less
than the 25th percentile of the comparable sample, the executive receives no awards for this section. If the TSR is
between the 25th and 50th percentile of the sample, the executive will receive a proportional number of rewards to
result (0% for the 25th percentile and 100% for the 50th percentile).
• With a weighting of 40%, the average return on equity (ROE) of the ACS Group in 2023-2025, measured as the
percentage net profit over equity for the previous year (Net Profit / Equity), must be more than 10%. In the case of a
lower result, the executive will be granted no awards.
• With a weighting of 20%, the average percentile obtained in the Dow Jones Sustainability Index (DJSI) in 2023-2025
must be greater than 85%. In this case, the executive receives 100% of the awards assigned in this section. If the
average DJSI percentile in the measurement period is less than the 60th percentile, the executive receives no awards
in this section. If the result is between the 60th and 85th percentile, the executive will receive a proportional
number of rewards to result (0% for the 60th percentile and 100% for the 85th percentile).
The share-based remuneration is recognised as expenses in the consolidated income statement, with a balancing entry in other
reserves in equity. Total amounts recognised in the period to 31 December 2023 is AUD $0.2 million.
75
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
35. EMPLOYEE BENEFITS CONTINUED
b)
Long-Term Incentive Plan continued
Date of grant
Date of expiry
Grant date fair value
Original grant
Unexercised options
Unexercised options at 1 January 2023
- Granted
-
-
Exercised
Lapsed
Unexercised options at 31 December 2023
Exercisable options
- At 31 December 2023
Non-exercisable options
- At 31 December 2023
36. RELATED PARTY DISCLOSURES
a) Key management personnel (KMP) and Directors
KMP compensation:
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
Total KMP compensation
2023 Long-Term Incentive
1 July 2023
30 June 2028
AUD $3.60
1,040,000
-
1,040,000
-
-
1,040,000
-
1,040,000
12 months to
December 2023
$’000
12 months to
December 2022
$’000
12,278
9,632
157
128
122
137
441
-
12,685
10,210
The terms and conditions of transactions with KMP and their related entities were no more favourable than those available, or
which might reasonably be expected to be available, on similar transactions to non-Director related entities on an arm’s length
basis.
Directors:
D Robinson is a partner of ESV Accounting and Business Advisors and Principal of Harveys Consulting, both of which received fees
from HOCHTIEF Australia Holdings Limited for services provided to that company, which is a related party.
R Seidler received fees from HOCHTIEF Australia Holdings Limited, for services provided to that company.
Loans to KMP
There were no loans to KMP in the current or prior reporting period.
76
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
36. RELATED PARTY DISCLOSURES CONTINUED
b) Transactions with other related parties
Unless otherwise disclosed, transactions with other related parties are made on normal commercial terms and conditions. The
aggregate of related party transactions was not material to the overall operations of the Group.
Aggregate amounts receivable from related parties at reporting date
Parent
Associates
Joint venture entities
Other
Aggregate amounts payable to related parties at reporting date
Associates
Joint venture entities
Revenue – income from related parties
Parent1
Associates
Joint venture entities
Revenue - interest received / receivable from related parties
Associates
Finance costs – interest paid / payable to related parties
Joint venture entities
Finance costs - impact of discounting - related parties
Associates
Joint venture entities
December 2023
$’000
December 2022
$’000
156,100
21,490
10,825
2,720
295,400
13,200
16,600
-
(64,389)
(60,378)
(233,451)
(196,753)
12 months to
December 2023
$’000
12 months to
December 2022
$’000
57,500
31,434
136,728
35,700
3,226
32,381
1,200
-
-
(1,600)
(4,011)
(8,815)
(3,761)
(10,355)
1CIMIC has identified certain unavoidable costs incurred due to HOCHTIEF Australia Holdings Limited’s acquisition of the remaining
minority interest in CIMIC or through CIMIC management aligning to HOCHTIEF Australia Holdings Limited’s strategic direction. As
such CIMIC and HOCHTIEF Australia Holdings Limited have agreed a schedule of costs to be re-imbursed where it is considered
commercially reasonable, by both parties, to do so. HOCHTIEF Australia Holdings Limited has agreed to reimburse CIMIC $57.5
million of costs for the year ending 31 December 2023 (31 December 2022: $35.7 million).
77
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
36. RELATED PARTY DISCLOSURES CONTINUED
b) Transactions with other related parties continued
Number of employees
Number of employees at reporting date1
1Includes a proportional share of employees of Thiess. Refer to Note 26: Joint Venture entities.
c) Company information
December 2023
Number of
employees
December 2022
Number of
employees
30,960
25,470
CIMIC Group Limited is a public company limited by shares and is domiciled in Australia. The Company was incorporated in
Victoria, Australia. The address of the registered office is 177 Pacific Highway, North Sydney, NSW, Australia, 2060. Number of
employees at reporting date: 6 (31 December 2022: 6).
The Group operates in the infrastructure, resources and property markets. Principal activities of the Group within these markets
are construction, mining and mineral processing, public private partnerships, engineering and other services (including
environmental, telecommunications and operations and maintenance).
d) Ultimate parent entity
The ultimate Australian parent entity is HOCHTIEF Australia Holdings Limited and the ultimate parent entity is Actividades de
Construcción y Servicios, SA (ACS) incorporated in Spain.
CIMIC Directors, Mr D Robinson, Mr P Sassenfeld and Mr R Seidler were directors of HOCHTIEF Australia Holdings Limited during
the period.
CIMIC Directors Messrs del Valle Pérez, López Jiménez and Juan Santamaria were directors of ACS during the period.
78
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
37. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES
a) Parent entity disclosures
As at, and throughout, the financial year ended 31 December 2023 the parent entity of the Group was CIMIC Group Limited. A
summarised statement of profit or loss and summarised statement of financial position at 31 December 2023 is set out below:
Comprehensive income
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings / (accumulated losses)
Total equity
Company
12 months to
December 2023
$m
12 months to
December 2022
$m
1,361.3
238.9
-
1,361.3
-
238.9
December 2023
$m
December 2022
$m
192.9
6,122.1
6,315.0
35.8
4,210.9
4,246.7
220.8
4,980.7
5,201.5
280.0
4,033.9
4,313.9
2,068.3
887.6
1,458.7
(91.5)
701.2
2,068.4
1,458.7
(91.5)
(479.6)
887.6
79
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
37. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities
Name of entity
512 Wickham Street Pty Ltd
512 Wickham Street Trust
A.C.N. 126 130 738 PTY LTD
A.C.N. 151 868 601 PTY. LTD.
Alloy Fab Pty Ltd
Arus Tenang Sdn Bhd
BCJHG Nominees Pty Ltd
BCJHG Trust
Bintai – Leighton JV
Broad Construction Pty Ltd1
Broad Construction Services (NSW / VIC) Pty Ltd
Broad Construction Services (WA) Pty Ltd
Broad Group Holdings Pty Ltd1
CIMIC Admin Services Pty Limited1
CIMIC Finance (USA) Pty Ltd
CIMIC Finance Limited1
CIMIC Group Investments No. 2 Pty Limited
CGI3 Pty Limited (formerly known as CIMIC Group Investments No. 3 Pty Limited)
CIMIC Group Investments Pty Limited
CIMIC Group Limited4
CIMIC Residential Investments Pty Ltd
CMENA Pty Limited
CPB Contractors (PNG) Limited
CPB Contractors (Victoria) Pty Limited
CPB Contractors Pty Limited1
CPB Contractors UGL Engineering Joint Venture
Curara Pty Ltd
D.M.B. Pty. Ltd.
DAIS VIC Pty Ltd
Devine Constructions Pty Ltd
Devine Funds Pty Ltd
Devine Funds Unit Trust
Devine Homes Pty Ltd
Devine Land Pty Ltd
Devine Pty Limited
Devine Management Services Pty Ltd
Devine Springwood No. 2 Pty Ltd
Ecco Engineering Company Limited
EIC Activities Pty Ltd
EIC Activities Pty Ltd (NZ)
Giddens Investment Limited
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
NSW
NSW
VIC
VIC
WA
Malaysia
VIC
VIC
Singapore
QLD
WA
WA
WA
NSW
NSW
NSW
VIC
VIC
VIC
VIC
VIC
VIC
100% Papua New Guinea
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
VIC
NSW
VIC
WA
QLD
VIC
QLD
VIC
QLD
QLD
QLD
QLD
QLD
QLD
Hong Kong
VIC
New Zealand
Hong Kong
80
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
37. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
Hamilton Harbour Developments Pty Ltd
Hamilton Harbour Unit Trust (Devine Hamilton Unit Trust)
Hopeland Solar Farm Pty Ltd
Hopeland Solar Farm Trust
Hopeland Solar Holdings Pty Ltd
ICC Infrastructure Pty Ltd
ICC Mining Pty Ltd
IDD Technology Pty Ltd (formerly known as ITCO Pty Ltd)
Industrial Composites Engineering Pty Ltd
Innovative Asset Solutions Group Pty Ltd
Innovative Asset Solutions Pty Ltd
Innovative Asset Solutions Pty Ltd & UGL Operations and Maintenance (Services)
Pty Ltd
Jarrah Wood Pty Ltd
Jet-Cut Pty Ltd
JH ServicesCo Pty Ltd
JHAS Pty Ltd
JHI Investment Pty Ltd
Kings Square Developments Pty Ltd
Kings Square Developments Unit Trust
Legacy JHI Pty Ltd
Leighton (PNG) Limited
Leighton Asia (Hong Kong) Holdings (No. 2) Limited
Leighton Asia Limited
Leighton Asia Philippines Inc (formerly Leighton Contractors (Philippines) Corp)
Leighton Asia Southern Pte. Ltd.
Leighton Contractors (Asia) Limited
Leighton Contractors (Indo-China) Limited
Leighton Contractors (Laos) Sole Co., Limited
Leighton Contractors (Malaysia) Sdn Bhd
Leighton Contractors (Philippines) Inc
Leighton Contractors Inc
Leighton Contractors Infrastructure Nominees Pty Ltd
Leighton Contractors Infrastructure Pty Ltd
Leighton Contractors Infrastructure Trust
Leighton Contractors Lanka (Private) Limited
Leighton Contractors Pty Ltd
Leighton Engineering & Construction (Singapore) Pte Ltd
Leighton Engineering Sdn Bhd
Leighton Equity Incentive Plan Trust
(A)
(A)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
QLD
VIC
NSW
QLD
NSW
WA
WA
NSW
WA
WA
WA
WA
WA
WA
VIC
VIC
VIC
QLD
QLD
VIC
100% Papua New Guinea
100%
100%
100%
100%
100%
100%
100%
100%
40%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Hong Kong
Hong Kong
Philippines
Singapore
Hong Kong
Hong Kong
Laos
Malaysia
Philippines
United States
VIC
VIC
VIC
Sri Lanka
NSW
Singapore
Malaysia
NSW
81
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
37. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
Leighton Foundation Engineering (Asia) Limited
Leighton Group Property Services Pty Ltd
Leighton Harbour Trust
Leighton Holdings Infrastructure Nominees Pty Ltd
Leighton Holdings Infrastructure Pty Ltd
Leighton Holdings Infrastructure Trust
Leighton India Contractors Private Limited3
Leighton India Holdings Pte Ltd
Leighton Infrastructure Investments Pty Limited
Leighton Infrastructure Limited
Leighton International Mauritius Holdings Limited No. 4
Leighton Investments Mauritius Limited No. 4
Leighton Joint Venture
Leighton Middle East & Africa (Holding) Limited
Leighton Offshore Eclipse Pte Ltd
Leighton Offshore Mynx Pte Ltd
Leighton Offshore Pte Ltd
Leighton Offshore Sdn Bhd
Leighton Offshore Stealth Pte Ltd
Leighton Portfolio Services Pty Limited
Leighton Projects Consulting (Shanghai) Limited
Leighton Properties (Brisbane) Pty Limited
Leighton Properties (VIC) Pty Ltd
Leighton Properties (WA) Pty Limited
Leighton Properties Pty Limited
Leighton Superannuation Pty Ltd
Leighton U.S.A. Inc.
Leighton Yongnam Joint Venture
LH Holdings Co Pty Ltd
LH Holdings No. 2 Pty Ltd
LH Holdings No. 3 Pte Ltd
LMENA Pty Limited
LNWR Pty Limited
LNWR Trust
Logistic Engineering Services Pty Ltd
Network Rezolution Finance Pty Ltd
Newest Metro Pty Ltd
Nexus Point Solutions Pty Ltd
Opal Insurance (Singapore) Pte Ltd
Optima Activities Pty Ltd
Pacific Partnerships Energy Ptd Ltd
Pacific Partnerships Holdings Pty Ltd
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Hong Kong
VIC
QLD
VIC
VIC
VIC
India
Singapore
NSW
Hong Kong
Mauritius
Mauritius
Hong Kong
Cayman Islands
Singapore
Singapore
Singapore
Malaysia
Singapore
ACT
China
QLD
VIC
NSW
QLD
NSW
United States
Singapore
VIC
VIC
Singapore
VIC
VIC
NSW
VIC
VIC
NSW
NSW
Singapore
NSW
VIC
VIC
82
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
37. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
Pacific Partnerships Investments 2 Pty Ltd
Pacific Partnerships Investments 2 Trust
Pacific Partnerships Investments Pty Ltd
Pacific Partnerships Investments Trust
Pacific Partnerships Pty Ltd
Pacific Partnerships Services NZ Limited
Pekko Engineers Limited
Pioneer Homes Australia Pty Ltd
PT Leighton Contractors Indonesia
Regional Trading Limited
Riverstone Rise Gladstone Pty Ltd
Riverstone Rise Gladstone Unit Trust
Sedgman Asia Ltd
Sedgman Botswana (Pty) Ltd
Sedgman Canada Limited
Sedgman Chile SPA
Sedgman Consulting Pty Ltd
Sedgman CPB Joint Venture (SCJV)
Sedgman Employment Services Pty Ltd
Sedgman Engineering Technology (Beijing) Company Limited
Sedgman International Employment Services Pty Ltd
Sedgman Mozambique Limitada2
Sedgman Novopro Projects Inc.
Sedgman Onyx Pty Limited
Sedgman Operations Employment Services Pty Ltd
Sedgman Operations Pty Ltd
Sedgman Projects Employment Services Pty Ltd
Sedgman Pty Ltd
Sedgman South Africa (Proprietary) Ltd
Sedgman USA Inc
Silverton Group Pty Ltd
Sustaining Works Pty Limited
Talcliff Pty Ltd
Tambala Pty Ltd2
Telecommunication Infrastructure Pty Ltd
Thai Leighton Limited
Think Consulting Group Pty Ltd
Thiess Infrastructure Nominees Pty Ltd
Thiess Infrastructure Pty Ltd
Thiess Infrastructure Trust
Townsville City Project Pty Ltd
Interest
held
Place of
incorporation
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(A)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
100%
100%
100%
100%
100%
100%
100%
100%
95%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
VIC
VIC
VIC
VIC
VIC
New Zealand
Hong Kong
QLD
Indonesia
Hong Kong
QLD
QLD
Hong Kong
Botswana
Canada
Chile
QLD
QLD
QLD
China
QLD
Mozambique
Canada
WA
QLD
QLD
QLD
QLD
South Africa
United States
WA
QLD
QLD
Mauritius
VIC
Thailand
VIC
VIC
VIC
VIC
NSW
83
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
37. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
Townsville City Project Trust
UGL (Asia) Sdn Bhd
UGL (NZ) Limited
UGL (Singapore) Pte Ltd
UGL Engineering Private Limited3
UGL Engineering Pty Ltd
UGL Integra Pty Ltd
UGL Operations and Maintenance (Services) Pty Limited
UGL Operations and Maintenance Pty Ltd
UGL Pty Limited
UGL Rail (North Queensland) Pty Ltd
UGL Rail Pty Ltd
UGL Rail Services Pty Limited
UGL Regional Linx Pty Ltd
UGL Resources (Contracting) Pty Ltd
UGL Resources (Malaysia) Sdn Bhd
UGL Solutions Pty Limited
UGL Unipart Rail Services Pty Ltd
UGL Utilities Pty Ltd (formerly known as Newcastle Engineering Pty Ltd)
United Group Infrastructure (NZ) Limited
United KG (No. 1) Pty Ltd
United KG (No. 2) Pty Ltd
Wai Ming M&E Limited
Western Port Highway Trust
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
70%
100%
100%
100%
100%
100%
100%
QLD
Malaysia
New Zealand
Singapore
India
NSW
NSW
QLD
VIC
WA
QLD
NSW
NSW
NSW
VIC
Malaysia
WA
VIC
NSW
New Zealand
NSW
VIC
Hong Kong
VIC
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
84
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
37. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
1These companies have the benefit of ASIC Instrument 2016/785 as at 31 December 2023. Refer to Note 37(h): CIMIC Group Limited
and controlled entities – Deed of cross guarantee.
2Entity has a 30 June reporting date.
3Entity has a 31 March reporting date.
4This company is a party to the Deed of Cross Guarantee as Holding Entity.
(A) Incorporated / established in the 2023 reporting period.
(B) Entities included in the tax-consolidated Group.
Where the Group has an ownership interest of less than 50%, the entity is consolidated where the Group can demonstrate its
control of the entity, in that it is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
c) Acquisition and disposal of controlled entities
Refer to Note 29: Acquisitions and Disposals for further details.
d)
Liquidation of controlled entities
The following controlled entities have been liquidated during the period to 31 December 2023 as they are no longer required by
the Group in the ordinary course of business:
Devine Queensland No. 10 Pty Ltd
Devine SA Land Pty Ltd
Leighton Offshore Faulkner Pte Ltd
Sedgman South Africa Holding (Pty) Ltd
▪
▪
▪
▪
▪ WestGo Finance Pty Ltd
e) Parent entity commitments and contingent liabilities
Contingent liabilities under indemnities given on behalf of controlled entities in respect of the parent: bank guarantees: $3,554.5
million (31 December 2022: $3,164.2 million); insurance bonds: $1,747.6 million (31 December 2022: $1,791.7 million); letters of
credit: $333.4 million (31 December 2022: $386.2 million).
Capital expenditure contracted for at the reporting date but not recognised as liabilities of the parent was $nil (31 December 2022:
$nil).
85
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
37. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
f) Material subsidiaries
Set out below are the Company’s principal subsidiaries at 31 December 2023. Unless otherwise stated, the subsidiaries as listed
below have share capital consisting solely of ordinary shares, which are held directly by the Company, and the proportion of
ownership interests held equals to the voting rights held by the Company.
Name of entity
Principal activity
Country of
incorporation
CPB Contractors Pty Limited1
Construction
Australia
Leighton Asia Limited
Construction
Hong Kong
LH Holdings No.2 Pty Ltd2
Construction
UGL Pty Limited
Services
Australia
Australia
Ownership interest held by the
Company
Ownership interest held by non-
controlling interests
December 2023
December 2022
December 2023
December 2022
%
100
100
100
100
%
100
100
100
100
%
-
-
-
-
%
-
-
-
-
1CPB Contractors Pty Limited has the benefit of ASIC Instrument 2016/785 as at 31 December 2023. For further information, refer to
section (h).
2During the year ended 31 December 2022, Leighton International Limited and its subsidiaries were part of an internal
reorganisation that would transfer Leighton International and its subsidiaries under LH Holdings No.2 Pty Ltd. As a result Leighton
International Limited ceased to be a material subsidiary, and LH Holdings No.2 Pty Ltd became a material subsidiary.
Non-controlling interests
There were no material non-controlling interests relating to the Company’s material subsidiaries disclosed above as at 31
December 2023. There were no material transactions with non-controlling interests during the period to 31 December 2023.
g)
Parent entity transactions with wholly-owned controlled entities
Transactions with wholly-owned controlled entities were as follows: aggregate amounts receivable: $791.8 million (31 December
2022: $780.1 million); aggregate amounts payable: $4,209.8 million (31 December 2022: $4,287.4 million); interest received /
receivable: $9.3 million (31 December 2022: $5.3 million); interest paid / payable: $221.6 million (31 December 2022: $92.3
million); dividends received: $1,536.0 million (31 December 2022: $213.6 million); fees paid: $119.0 million (31 December 2022:
$120.0 million); sale of assets $nil (31 December 2022: $349.1 million).
86
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
37. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
h) Deed of Cross Guarantee
Pursuant to the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (ASIC Instrument), the Company and certain
wholly owned subsidiaries entered into the Deed of Cross Guarantee dated 19 December 2016 (CIMIC Deed) for the principal
purpose of enabling these entities to take advantage of relief from the requirements of the Corporations Act to prepare and lodge a
financial report, directors’ report and auditor’s report (Financial Reporting Relief) available under the ASIC Instrument for financial
years ending 31 December 2016 onwards. The effect of the CIMIC Deed is that the Company guarantees to each creditor payment
in full of any debt in the event of the winding up of any of the subsidiaries which are party to the CIMIC Deed under certain
provisions of the Corporations Act. If a winding up occurs under other provisions of the law, the Company will only be liable in the
event that after six months any creditor has not been paid in full. The subsidiaries have given similar guarantees in the event the
Company or any other subsidiary party to the CIMIC Deed is wound up.
As at 31 December 2023, the following entities are party to the CIMIC Deed and seek to rely on financial reporting relief in respect
of the financial year ended 31 December 2023:
▪
▪
▪
▪
▪
▪
CIMIC Group Limited (ACN 004 482 982) (as trustee)
CIMIC Finance Limited (ACN 002 323 373) (as alternative trustee)
CIMIC Admin Services Pty Limited (ACN 086 383 977)
CPB Contractors Pty Limited (ACN 000 893 667)
Broad Group Holdings Pty Ltd (ACN 052 046 518)
Broad Construction Pty Ltd (ACN 089 532 061)
A consolidated statement of profit or loss and statement of financial position, comprising the Company and entities which are a
party to the CIMIC Deed, after eliminating all transactions between parties to the CIMIC Deed, at 31 December 2023 is set out
below.
Deed of Cross Guarantee
Statement of Profit or Loss
Profit / (loss) before tax
Income tax (expense) / benefit
Profit ( loss) for the period
Retained earnings brought forward
Dividends paid
Retained earnings at reporting date
12 months to
December 2023
$m
12 months to
December 2022
$m
586.1
(18.1)
568.0
31.2
(180.5)
418.7
(466.1)
172.3
(293.8)
558.5
(233.5)
31.2
87
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
37. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
h) Deed of Cross Guarantee continued
Deed of Cross Guarantee
Statement of Financial Position
Assets
Cash and cash equivalents
Trade and other receivables
Current tax asset
Inventories
8Total current assets
Trade and other receivables
Investments
Property, plant and equipment
Deferred tax asset
Intangibles
Total non-current assets
Total assets
Liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Lease liabilities
Total current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Lease liabilities
Total non-current liabilities
BTotal liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
December 2023
$m
December 2022
$m
1,702.5
2,507.1
147.0
42.3
4,398.9
3,139.4
2,287.7
265.0
43.1
6.3
5,741.5
10,140.4
5,790.3
143.8
-
48.7
1,741.6
3,037.0
153.3
68.5
5,000.4
3,884.6
1,521.8
287.5
53.9
4.7
5,752.5
10,752.9
5,781.7
132.7
110.0
38.6
5,982.8
6,063.0
111.7
13.5
2,694.2
68.2
2,887.6
8,870.4
478.9
12.7
3,235.2
86.2
3,813.0
9,876.0
1,270.0
876.9
1,458.7
(607.4)
418.7
1,270.0
1,458.7
(613.0)
31.2
876.9
88
9
3
6
B
1
0
5
4
B
1
0
4
7
B
1
0
4
7
B
1
0
5
4
B
1
0
4
7
B
1
0
7
7
B
1
0
4
9
B
1
0
5
0
B
1
0
6
4
B
1
0
6
5
B
1
0
6
4
CIMIC Group Limited Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2023
38. NEW ACCOUNTING STANDARDS
Standards in issue but not yet effective
▪
▪
▪
▪
▪
▪
▪
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current
AASB 2021-7c Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and
Editorial Corrections
AASB 2022-5 Amendments to Australian Accounting Standards – Lease Liability in a Sale and Leaseback
AASB 2022-6 Amendments to Australian Accounting Standards – Non-current Liabilities with Covenants
AASB 2023-1 Amendments to Australian Accounting Standards – Supplier Finance Arrangements
AASB 2023-5 Amendments to Australian Accounting Standards – Lack of Exchangeability
39. EVENTS SUBSEQUENT TO REPORTING DATE
Subsequent to reporting date:
▪
The Directors approved the financial report on 13 February 2024.
89
CIMIC Group Limited Annual Report 2023
1 Financial Report
Statutory Statements
DIRECTORS’ DECLARATION
1.
In the opinion of the Directors of CIMIC Group Limited (the Company):
a)
The financial statements and notes, set out on pages 6-89, are in accordance with the Corporations Act 2001, ¡ncluding:
i)
giving a true and fair view of the Company’s and the Consolidated Entity’s financial position as at 31 December
2023 and of their performance for the financial year ended on that date; and
ji)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b)
there are reasonable grounds to believe that the Company wiII be able to pay its debts as and when they become due
and payable.
There are reasonable grounds to believe that the Company and the controlled entities identified in Note 37 to the financial
statements wiIl be able to meet any obligations or liabilities to which they are or may become subject by virtue ofthe Deed of
Cross Guarantee between the Company and those controlled entities pursuant to ASIC Instrument 2016/785.
The Directors draw attention to Note 1 to the financial statements, which includes a statement of compliance with
International Financial Reporting Standards.
2.
3.
Sydney, 13 February 2024.
Signed for and on behalf of the Board in accordance with a resolution of the Directors:
Executive Chairman
David Robinson
Director
90
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Quay Quarter Tower,
50 Bridge Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Independent Auditor’s Report to the members of CIMIC Group Limited
Opinion
We have audited the financial report of CIMIC Group Limited (“CIMIC”, or the “Company”) and its subsidiaries
(the “Group”), which comprises the Consolidated Statement of Financial Position as at 31 December 2023, the
Consolidated Statement of Profit or Loss, the Consolidated Statement of Other Comprehensive Income, the
Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows for the year then
ended, and notes to the financial statements, including material accounting policy information, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Group’s financial position as at 31 December 2023 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Directors’ report for the year ended 31 December 2023, but does not include the financial report
and our auditor’s report thereon.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation
91
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
92
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible for
the direction, supervision and performance of the Group’s audit. We remain solely responsible for our
audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
DELOITTE TOUCHE TOHMATSU
Jason Thorne
Partner
Chartered Accountants
Sydney, 13 February 2024
93